On January 2,2014,Mahoney Sales issued $10,000 in bonds for $10,900.They were 5-year bonds with a stated rate of 4%,and pay semiannual interest payments.Mahoney Sales uses the straight-line method to amortize the bond premium.On June 30,2014,when Mahoney makes the first payment to bondholders,how much will they report as interest expense?

Question

Quizplus · Accepted Answer

A) Calculations: ($10,000 × 4% × 6/12) - ($900/5 × 6/12) = $110

On January 2,2014,Mahoney Sales Issued $10,000 in Bonds for $10,900