Ask Question
5 June, 17:09

On January 1, 2018, Album Co. issued $200,000 of ten-year bonds. Interest is payable semi-annually on June 30 and December 31. The bonds were sold for $185,953. A journal entry was prepared on June 30, the first interest payment date, to record interest expense of $13,016 and cash interest paid of $12,000. What is the annual stated interest rate for the bonds?

+1
Answers (1)
  1. 5 June, 18:27
    0
    12%

    Explanation:

    Album Co. paid $12,000 for interest, and that is the stated interest of the bonds.

    Stated interest = $12,000 / $200,000 = 6% semiannually, therefore the annual stated interest is 6% x 2 = 12%

    The stated rate is applied to the face value of the bonds, regardless of their selling or trading price.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “On January 1, 2018, Album Co. issued $200,000 of ten-year bonds. Interest is payable semi-annually on June 30 and December 31. The bonds ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers