The Marx Company issued $100,000 of 12% bonds on April 1, 2010 at face value. The bonds pay interest semiannually on January 1 and July 1. The bonds are dated January 1, 2010, and mature on January 1, 2014. The total interest expense related to these bonds for the year ended December 31, 2010 is

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The bonds were issued on April 1st, 2010, so only 9 months of interest expense would be incurred in 2010. The bonds pay interest semiannually on January 1st and July 1st, therefore, the interest expense for the 9 months ending December 31st, 2010 would be (9/12) x 12% x $100,000 = $9,000.

The Marx Company Issued $100,000 of 12% Bonds on April