On November 1,2009,Davis Company issued $30,000,ten-year,7% bonds for $29,100.The bonds were dated November 1,2009,and interest is payable each November 1 and May 1.How much is the semi-annual interest expense when the straight-line method is utilized?
A)$2,010
B)$2,190
C)$1,095
D)$2,055

Question

Quizplus · Accepted Answer

The straight-line discount amortization ($45) = Discount on bonds payable ($30,000 - $29,100) F1F1F1S1F1F1F10 20 semi-annual interest payments.Semi-annual interest expense ($1,095) = Semi-annual cash payment ($30,000 F1F1F1S1F1F1F10 .07 F1F1F1S1F1F1F10 6/12) + Discount on bonds payable amortization ($45).

On November 1,2009,Davis Company Issued $30,000,ten-Year,7% Bonds for $29,100