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On November​ 1, 2018, Arch Services issued $ 305 comma 000 of eightminusyear bonds with a stated rate of 11​% at par. Interest payments occur each April 30 and October 31. On December​ 31, 2018, Arch made an adjusting entry to accrue interest at yearminusend. What is the amount of Interest Expense that will be recorded on December​ 31, 2018?​ (Do not round any intermediate​ calculations, and round your final answer to the nearest​ dollar.)

User Kook
by
8.2k points

1 Answer

3 votes

Answer:

$5,603

Step-by-step explanation:

The calculation of Interest Expense is shown below:-

Interest made accrued on Dec 31, 2018 = Services issued × Stated rate × Remaining months ÷ Number of Months in a year

= $305,000 × 11% × 2 ÷ 12

= $305,000 × 11% × 0.167

= $5,603

Therefore for computing the Interest Expense we simply applied the above formula.

User JohnnyAce
by
8.6k points
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