XYZ is a national dealership trading in spaceships and automated self flying drones. It wishes...
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XYZ is a national dealership trading in spaceships and automated self flying drones. It wishes to purchase a custom-made metal press having a market value of $1,000,000 for use in its maintenance division. XYZ approached The Industrial Bank for a ten year loan to finance the acquisition. It offered to pay coupon interest at the end of each year at an annual rate of 3%. On January 1, 2019, the Bank loaned an amount of $996,744 which, along with additional internal funds, the company used to purchase the equipment. The current market rate on that date was 8%.
On December 31, 2019, XYZ recorded $79,739 to Bond Interest Expense and $39,739 to Bonds Payable in the adjusting entry prepared to record the annual accrued interest for 2019.
The maturity value of the loan would amount to
a.
$450,000.
b.
$1,446,744.
c.
$1,298,698.
d.
$1,500,000.
e.
Unable to determine the amount with the given data.
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