question archive On January 1, 2021, Legion Company sold $230,000 of 6% ten-year bonds
On January 1, 2021, Legion Company sold $230,000 of 6% ten-year bonds
Subject:AccountingPrice:2.87 Bought7
On January 1, 2021, Legion Company sold $230,000 of 6% ten-year bonds. Interest is payable semiannually on June 30 and December 31. The bonds were sold for $150,858, priced to yield 12%. Legion records interest at the effective rate.
Legion should report bond interest expense for the six months ended June 30, 2021, in the amount of: (Round your answer to the nearest dollar amount.)
Multiple Choice
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$6,900.
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$13,800.
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$9,051.
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$27,600.
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Answer
- Interest Expense on 30 June 2021
= Carrying Value of Bond x Effective interest rate
= $ 150858 x 12% yield interest x 6 months/12 months
= $ 9051 - Correct Answer = Option #3: $ 9,051
