On July 1,2016,Sharon Equipment Dealer issued $520,000 of 7% bonds payable that mature in five years.These bonds were issued at face value and pay interest each June 30 and December 31.Each semiannual interest payment will be higher than the amount of cash paid to the bondholders.

Question

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The semiannual interest payment is calculated as 7% of the face value divided by two, which equals the cash paid to bondholders. Since the bonds were issued at face value, the interest payment equals the cash paid.

On July 1,2016,Sharon Equipment Dealer Issued $520,000 of 7% Bonds