On October 1, Year 1, Howell Stores, Inc. issues twenty-year, first mortgage bonds with a

face value of $1,000,000. The proceeds of the issue are $1,060,000. The bonds bear interest at

the rate of 10 percent per year, payable semiannually at April 1 and October 1. Howell Stores Inc.

closes its books annually at December 31. Round amounts to the nearest dollar.

Assume that Howell Stores, Inc. uses the straight-line method to recognize interest expense. The

amount of interest payable at Dec 31st of the first year is?

HOW TO CALCULATE THIS QUESTION?