Blanding Company issues $1,000,000 of 8%,10-year bonds at 98 on February 28,2012.The bond pays interest on February 28 and August 31.The market rate of interest on the issuance date was 10%.On August 31,2012,how much cash did Blanding pay out to bondholders?
A) $41,000
B) $40,000
C) $80,000
D) $39,000

Question

Quizplus · Accepted Answer

B) Calculations: $1,000,000 × 8% × 6/12 = $40,000

Blanding Company Issues $1,000,000 of 8%,10-Year Bonds at 98 on February