Question

On January 1, 2018, 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, 2018, in the amount of:a. $10,000.
b. $12,000.
c. $10,620.
d. $8,850.

Answer 1

Answer:

Correct option is A $10,000

Explanation:

10% × ½ × $200,000 = $10,000.