Question

On january 1, 2018, lizzy's lemonade issues 7%, 15-year bonds with a face amount of $82,000 for $74,910, priced to yield 8%. interest is paid semiannually. what amount of interest expense will be recorded on june 30, 2018, the first interest payment date?

Answer 1

amount of interest expense = $2996.4

and interest exposed to be recorded on 30 June 2018

Step-by-step explanation:

given data

face amount = $82,000

rate = 7 %

time = 8 year

issue price = $74,910

yield = 8%

to find out

amount of interest expense and first interest payment date

solution

we know interest paid is semiannually

so amount of interest expense will be here as

amount of interest expense = issue price × yield .................1

put here value

amount of interest expense = $74910 × 8% ×
`(1)/(2)`

amount of interest expense = $2996.4

so interest exposed to be recorded on 30 June 2018