A company issued 5-year,7% bonds with a par value of $100,000.The company received $97,947 for the bonds.Using the straight-line method,the amount of interest expense for the first semiannual interest period is:
A)$3,294.70.
B)$3,500.00.
C)$3,705.30.
D)$7,000.00.
E)$7,410.60.

Question

Quizplus · Accepted Answer

Cash interest paid: $100,000 * .07 * ½ year = $3,500
Discount amortization: ($100,000 - $97,947)/10 periods = $205.30
Interest expense = $3,500 + $205.30 = $3,705.30

A Company Issued 5-Year,7% Bonds with a Par Value of $100,000.The