On April 1,Braintree Corporation issued 10%,10-year,$400,000 bonds at face value.Interest dates are April 1 and October 1.The amount of cash paid out for interest during the current calendar year is:

Question

Quizplus · Accepted Answer

The bonds were issued at face value, so the total amount of the bonds is $400,000. The annual interest rate is 10%, which means the company will pay $40,000 in interest each year. The interest dates are April 1 and October 1, so the current calendar year would have two interest payments: one on April 1 and one on October 1. Therefore, the amount of cash paid out for interest during the current calendar year is $20,000 ($40,000 divided by 2). The correct answer is C.

On April 1,Braintree Corporation Issued 10%,10-Year,$400,000 Bonds at Face Value