Question

Winrow Company received proceeds of $565,500 on 10year, 8% bonds issued on January 1, 2013. The bonds had a face value of $600,000, pay interest annually on December 31st, and have a call price of 101. Winrow uses the straight-line method of amortization. What is the amount of interest Winrow must pay the bondholders in 2013?

Answer 1

$48,000

Step-by-step explanation:

The problem asks for "the amount of interest Winrow must PAY in 2013"

This might sound difficult but it's actually very simple.

Just multiply $6000,000 by the interest rate of 8%

So $600,000 multiplied by 8% is $48,000

That is the amount of cash to be paid for the interest in December 2013