On January 1, Marigold Corp. issued $6600000, 9% bonds for $7029000. The market rate of interest for these bonds is 8%. Interest is payable annually on December 31. Marigold uses the effective-interest method of amortizing bond premium. At the end of the first year, Marigold should report unamortized bond premium of: a) $397320
b) $398580
c) $375320
d) $297000

a) $397320

Explanation:

Total premium of bond = Issue price - Par value

Total premium of bond = $7,029,000 - $6,600,000

Total premium of bond = $429,000

Total Annual payment to be made by firm = Coupon rate* par value of bond

= 0.09*$6,600,000

= $594,000

Interest part of the total annual payment made by firm = Market rate*Issue price of bond

= 0.08*$7,029,000

= $562,320

Premium of bond to be amortized at the end of year 1 = Total Annual payment to be made by firm - Interest part of the total annual payment made by firm

= $594,000 - $562,320

= $31,680

Unamortized premium at the end of year 1 = total premium of bond - amortized premium at the end of year 1

= $429,000 - $31,680

= $397,320

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the answer choices are:

provides online banking

provides automatic payment services

provides home loans by using saving accounts

accept tax return refunds

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