On January 1, 1999, the Alvarez Company issued ($ 400,000) face value of (8 %, 10)-year bonds

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On January 1, 1999, the Alvarez Company issued \(\$ 400,000\) face value of \(8 \%, 10\)-year bonds for cash of \(\$ 328,298\), a price to yield \(11 \%\). The bonds pay interest semiannually and mature on January 1, 2009. Using the effective interest rate method, the bond interest expense for the first six months of 1999 would be:

a. \(\$ 36,113\).

b. \(\$ 18,056\).

c. \(\$ 32,000\).

d. \(\$ 16,000\).

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Financial Accounting A Business Perspective

ISBN: 9780072289985

7th Edition

Authors: Roger H. Hermanson, James Don Edwards

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