The Levi Company issued $200,000 of 12% bonds on January 1 of the current year at face value. The bonds pay interest semiannually on January 1 and July 1. The bonds are dated January 1, and mature in five years, on January 1. The total interest expense related to these bonds for the current year ending on December 31 is

Question

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Total interest expense = (Face value of bonds × 12% × 1/2 year) × 2 = ($200,000 × 12% × 1/2 year) × 2 = $24,000

The Levi Company Issued $200,000 of 12% Bonds on January