Question

On January 1, 2021, Legion Company sold $300,000 of 10% ten-year bonds. Interest is payable semiannually on June 30 and December 31. The bonds were sold for $265,590, priced to yield 12%. 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

$15,000

Step-by-step explanation:

Calculation to determine what Legion should pay as cash interest for the six months ended June 30, 2021

Cash interest for the six months ended June 30, 2021 =$300,000*10%*6/12

Cash interest for the six months ended June 30, 2021=$15,000

Therefore Legion should pay cash interest for the six months ended June 30, 2021, in the amount of $15,000