Question

On January 1, 2018, Legion Company sold $200,000 of 10% ten-year bonds. Interest is payable semiannually on June 30 and December 31. The bonds were sold for $177,000, priced to yield 12%. Legion records interest at the effective rate. Legion should report bond interest expense for the six months ended June 30, 2018, in the amount of:

Answer 1

$10,620

Step-by-step explanation:

Calculation for what Legion should report bond interest expense for the six months ended June 30, 2018,

Bond interest expense=(12%/2 semiannually*$177,000)

Bond interest expense=6% × $177,000

Bond interest expense=$10,620

Therefore Legion should report bond interest expense for the six months ended June 30, 2018, in the amount of:$10,620