NEED ASAP 10 MINS !!!! SHOW CALCULATIONS PLEASE!
Par value of bonds = $900,000
Issue price =98
Cash received from issuance of bonds = Par value of bonds x Issue price
= 900,000 x 98%
= $882,000
Discount on issue of bonds = Par value of bonds- Cash received from issuance of bonds
= 900,000-882,000
= $18,000
Semi annual interest payment = Par value of bonds x Interest rate x 6/12
= 900,000 x 4% x 6/12
= $18,000
Total interest payment during the life of bonds = Semi annual interest payment x Number of semi annual interest payment period
= 18,000 x 20
= $360,000
Total interest expense = Total interest payment during the life of bonds+ Discount on bonds payable
= 360,000+18,000
= $378,000
Kindly comment if you need further assistance. Thanks
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