Bolan Corporation issued 300, 12%, 10-year, $1,000 bonds on Jan. 1. The annual bond interest date is June 30, and the bonds were issued at face value. The amount of interest expense reported for the current year is:

Question

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The interest expense for the current year is calculated as the face value of the bonds ($1,000 each) times the number of bonds (300) times the interest rate (12%), which equals $36,000. This is because the bonds were issued at the beginning of the year and the interest rate is annual.

Bolan Corporation Issued 300, 12%, 10-Year, $1,000 Bonds on Jan