Winrow Company received proceeds of $565,500 on 10-year, 8% bonds issued on January 1, 2013. The bonds had a face value of $600,000, pay interest annually on December 31st, and have a call price of 101. Winrow uses the straight-line method of amortization. What is the amount of interest Winrow must pay the bondholders in 2013?
A) $45,240
B) $48,000
C) $51,450
D) $44,550

Question

Quizplus · Accepted Answer

The interest payment is calculated based on the face value of the bonds. The face value is $600,000, and the interest rate is 8%. Therefore, the interest payment for 2013 is $600,000 * 8% = $48,000.

Winrow Company Received Proceeds of $565,500 on 10-Year, 8% Bonds