Condi Corporation sells $100,000,12%,10-year bonds for 97 on January 1,2009.Interest is paid on January 1 and July 1.Straight-line amortization is used.The amount of interest paid on July 1,2009 is:

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The bond sells for $97,000 ($100,000 x 0.97) on January 1, 2009. The bond carries a 12% annual interest, which calculates to $12,000 per year ($100,000 x 0.12). To calculate the semi-annual interest payment, divide the annual interest payment by 2, which equals $6,000 ($12,000 / 2).

Since straight-line amortization is used, the same amount of interest expense is recognized for every interest payment. Therefore, the interest payment on July 1, 2009, will also be $6,000.

Condi Corporation Sells $100,000,12%,10-Year Bonds for 97 on January 1,2009