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Rainbow [258]
3 years ago
6

On June 1 of the current year, Cross Corp. issued $300,000 of 8% bonds payable at par with interest payment dates of April 1 and

October 1. In its income statement for the current year ended December 31,
what amount of interest expense should Cross report?
Business
1 answer:
Licemer1 [7]3 years ago
6 0

Answer:

$6,000

Explanation:

The computation of the interest expense is shown below:

= Total amount borrowed × interest rate × number of months ÷ total months in a year

= $300,000 × 8% × 3 months ÷ 12 months

= $6,000

The three months is calculated from October 1 to December 31

We have to apply the simple interest formula so that the accurate amount can come.

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