Question

On January 1, 2021, Legion Company sold $235,000 of 9% ten-year bonds. Interest is payable semiannually on June 30 and December 31. The bonds were sold for $206,917, priced to yield 11%. Legion records interest at the effective rate. Legion should pay cash interest for the six months ended June 30, 2021, in the amount of:

Answer 1

$18,622.53

Step-by-step explanation:

Calculation for how much should Legion pay for cash interest for the six months ended June 30, 2021

Using this formula

Cash interest= Bonds percentage* Bonds amount

Let plug in the formula

Cash interest=9%*$206,917

Cash interest=$18,622.53

Therefore how much should Legion pay for cash interest for the six months ended June 30, 2021 is $18,622.53