Kaleidoscope Paint On January 1,2013,this company issued $500,000,10-year,9% bonds for $480,745.The bonds pay interest on June 30 and December 31.The market rate is 10%.The company plans to use the effective interest method of amortizing bond discounts and premiums.

-Refer to Kaleidoscope Paint.The cash payment on June 30,2013,is

Question

-Refer to Kaleidoscope Paint.The cash payment on June 30,2013,is

Quizplus · Accepted Answer

Since the bonds pay interest on June 30 and December 31, the cash payment on June 30, 2013, is the interest payment for 6 months. 
The annual interest payment is $500,000 x 9% = $45,000. 
For 6 months, the interest payment is $45,000/2 = $22,500. 
Therefore, the cash payment on June 30, 2013, is $22,500. 
Hence, the best choice is B.

Kaleidoscope Paint on January 1,2013,this Company Issued $500,000,10-Year,9% Bonds for $480,745.The