A government has $3,000,000 of 6%, 10-year general obligation bonds outstanding. The bonds were issued on July 2, 20X7 to finance construction of a general capital asset. Interest is payable semiannually on January 1 and July 1. What is the maximum amount of interest expenditures that the government would be permitted to report on the bonds for 20X7?

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The bonds were issued on July 2, 20X7, so only one semiannual interest payment is due in 20X7, on January 1, 20X8. The interest for the period from July 2, 20X7, to December 31, 20X7, is $90,000 (calculated as $3,000,000 * 6% * 1/2 year).

A Government Has $3,000,000 of 6%, 10-Year General Obligation Bonds