Lake Company received proceeds of $188,000 on 10-year, 6% bonds issued on January 1, 2018. The bonds had a face value of $200,000, pay interest annually on January 1, and have a call price of 101. Lake uses the straight-line method of amortization. What is the amount of interest Lake must pay the bondholders on January 1, 2019?

Question

Quizplus · Accepted Answer

The interest payment is calculated based on the face value of the bonds. The face value is $200,000, and the interest rate is 6%. Therefore, the interest payment is $200,000 * 6% = $12,000.

Lake Company Received Proceeds of $188,000 on 10-Year, 6% Bonds