Question

On January 1, 2021, Legion Company sold $200,000 of 10% ten-year bonds. Interest is payable semiannually on June 30 and December 31. The bonds were sold for $177,000, priced to yield 12%. Legion records interest at the effective rate. Legion should pay cash interest for the six months ended June 30, 2021, in the amount of:

Answer 1

Answer:

10,000

Explanation:

Percent of bonds 10%

Amount sold 200000

Period of payment = semiannually, 1/2 a year.

We are required to find how much legion should pay

= 200000x1/2 *10%

=100000 × 0.1

= 10,000

Legion has to pay cash interest in the amount of $10000