Question

A company issued 6-year, 8% bonds with a par value of $750,000. The market rate when the bonds were issued was 7.5%. The company received $757,500 cash for the bonds. Using the straight-line method, the amount of recorded interest expense for the first semiannual interest period is:

Answer 1

$28,406.25

Step-by-step explanation:

Calculation for how much is the amount of interest expense for the first semiannual interest period Using the effective interest method

Interest expense=$757,500 x .075 x ½ year

Interest expense= $28,406.25

Therefore the amount of interest expense for the first semiannual interest period is $28,406.25