Webster Company issues $1,000,000 face value, 6%, 5-year bonds payable on December 31, 2011. Interest is paid
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Webster Company issues $1,000,000 face value, 6%, 5-year bonds payable on December 31, 2011. Interest is paid semiannually each June 30 and December 31. The bonds sell at a price of 97; Webster uses the straight-line method of amortizing bond discount or premium.[Stop and think: 1) How much is the bond discount or premium? 2) How much discount or premium is amortized every 6 months during the 5-year bond term? And 3) What effect does the bond discount or premium have on interest expense in this example?]
The amount of bond interest expense recognized by Webster Company in 2012 with respect to these bonds is:
A.$60,000.
B.$63,000.
C.$120,000.
D.$66,000.
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