On January 1, 2016, Sharpsburg, Inc.issued $400,000, 10-year, 10% bonds for $354,200.The bonds pay interest on June 30 and December 31.The market rate is 12%.The cash payment on June 30, 2016, is

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The cash payment on June 30, 2016, is the interest payment based on the stated (coupon) rate of the bond, which is 10%. The annual interest payment is 10% of the face value ($400,000), which equals $40,000. Since interest is paid semi-annually, the payment on June 30 is half of the annual interest, which is $40,000 / 2 = $20,000.