On May 1, 2010, Potter, Inc., issued $30, 000 of ten-year, 12% bonds payable dated January 1, 2010.The cash received amounted to $29, 808.The bonds pay interest semiannually.Potter's fiscal year ends on June 30, 2010.What amount of interest expense should be reported on the income statement prepared on June 30, 2010, assuming straight-line amortization?

Question

Quizplus · Accepted Answer

The correct answer is A because the interest expense for the six months ended June 30, 2010, is $624.00 ($30,000 x 12% x 6/12).