Bowlin Company issued $1,000,000 of 9 percent, ten-year bonds for $937,790 on July 1, 2008, when the market rate of interest was 10 percent. The bonds mature in ten years and pay interest on June 30 and December 31. Bowlin's fiscal year ends on December 31and the company uses the effective interest method of amortization. The interest expense for the six months ending December 31, 2008 is:

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The interest expense is calculated using the effective interest method. The carrying amount of the bonds at issuance is $937,790. The market rate is 10%, so the semi-annual interest rate is 5%. The interest expense for the first six months is $937,790 * 5% = $46,889.50.

Bowlin Company Issued $1,000,000 of 9 Percent, Ten-Year Bonds for $937,790