On January 1, 2020, Concord Corporation sold to Ivanhoe Company $910000 of its 9% bonds for $805619 to yield 11%. Interest is payable semiannually on January 1 and July 1. What amount should Concord report as interest expense for the six months ended June 30, 2020?

Question

Business

Davin

18 February, 10:06

On January 1, 2020, Concord Corporation sold to Ivanhoe Company $910000 of its 9% bonds for $805619 to yield 11%. Interest is payable semiannually on January 1 and July 1. What amount should Concord report as interest expense for the six months ended June 30, 2020?

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Answers (1)

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Fletcher Clark · Answer 1

Interest Expenses for six month = $44309.045

Explanation:

Given:

Sold amount = $805,619

Yield = 11% = 11/100 = 0.11

Interest Expenses = ?

Computation of Interest Expenses:

Time period (January 1 to July 1) = 6 month

Yield = 0.11 / 2 = 0.055 semi-annually

Interest Expenses = Sold amount * Yield

Interest Expenses for six month = $805,619 * 0.055

Interest Expenses for six month = $44309.045