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On January 1, 2018, Huff Co. sold $5,000,000 of its 10% bonds for $4,426,480 to yield 12%. Interest is payable semiannually on January 1 and July 1. What amount should Huff report as interest expense for the six months ended June 30, 2018?

Respuesta :

Answer:

$265,589

Explanation:

The computation of the interest expense for the six months is shown below:

= The value of the bond × yield interest rate × number of months ÷ total number of months in a year

= $4,426,480 × 12% × 6 months ÷ 12 months

= $265,589

The six months is computed from January 1 to June 30

And the other information which is given in the question is not relevant. Hence, ignored it

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