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How much interest expense is recognized on the debt

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Reference no: EM131809905

Problem

On 1/1/2014 the Jackson Co. has a $40,000 debt outstanding which matures on 12/31/16. Interest which is payable on Dec. 31 of each year, was last paid on 12/31/13.. Jackson negotiates a restructure in which the 3 remaining interest payments are $2,400 each and the amount to be paid at maturity is $38,739.

Using the effective interest method, how much interest expense is recognized on the debt for the year ending 12/31/14?

Reference no: EM131809905

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