On January 1, 2019, Tonika Company issued a four-year, $10,000, 10% bond. The interest is payable annually each December 31. The issue price was $9,689 based on an 11% effective interest rate. Tonika uses the effective-interest amortization method. The interest expense on the income statement for the year ended December 31, 2019 is closest to:

$1,065.79

Explanation:

Calculation to determine what The interest expense on the income statement for the year ended December 31, 2019 is closest to:

Using this formula

Interest expenses=Issue price * Effective Interest rate

Let plug in the formula

Interest expenses=$9,689*11%

Interest expenses=$1,065.79

Therefore The interest expense on the income statement for the year ended December 31, 2019 is closest to:$1,065.79

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