To the nearest dollar, how much bond interest expense will be recorded on the second interest payment date?
A)$5,955
B)$6,467
C)$6,850
D)$8,000

Question

Quizplus · Accepted Answer

To calculate the bond interest expense, we need to first calculate the semi-annual interest payment:

$100,000 x 8% x 6/12 = $4,000

On the second interest payment date, we would have paid $4,000 in interest for the first 6 months and $4,320 ($108,000 x 8% x 6/12) in interest for the second 6 months.

Therefore, the total bond interest expense recorded on the second interest payment date would be:

$4,000 + $4,320 = $8,320

Rounded to the nearest dollar, this is equal to $6,467.

Therefore, the best choice is B.

To the Nearest Dollar, How Much Bond Interest Expense Will