On 1 April, year 1, Cricket Corporation issues $60 million of 12%, 10-year bonds payable at par. Interest on the bonds is payable semiannually each 1 April and 1 October.

-The adjustment necessary at 31 December, Year 1 (if any), related to this bond issue involves:

Question

On 1 April, year 1, Cricket Corporation issues $60 million of 12%, 10-year bonds payable at par. Interest on the bonds is payable semiannually each 1 April and 1 October.

-The adjustment necessary at 31 December, Year 1 (if any), related to this bond issue involves:

Quizplus · Accepted Answer

The interest expense for the period from October 1 to December 31 needs to be accrued. The semiannual interest payment is $3,600,000 ($60 million * 12% / 2), so for three months, the interest expense is $1,800,000 ($3,600,000 / 2).

On 1 April, Year 1, Cricket Corporation Issues $60 Million