At the beginning of 2017, Bonita Industries issued 8% bonds with a face value of $4900000....
At the beginning of 2017, Bonita Industries issued 8% bonds with
a face value of $4900000. These bonds mature in five years, and
interest is paid semiannually on June 30 and December 31. The bonds
were sold for $4539360 to yield 10%. Bonita uses a calendar-year
reporting period. Using the effective-interest method of
amortization, what amount of interest expense should be reported
for 2017? (Round your answer to the nearest dollar.)
| $454138 |
| $468352 |
| $455484 |
| $452806 |
Homework Answers
Interest paid semiannually = 4900000*4% = 196000
Interest expense on June 30 = 4539360*5% = 226968
Interest expense on Dec 31 = (4539360+30968)*5% = 228516
Total interest expense 2017 = 228516+226968 = $455484
So answer is c) $455484
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