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Ajax Corporation issued 1,500 bonds each with face value of $1,000 on January 1, 2025. The...

Ajax Corporation issued 1,500 bonds each with face value of $1,000 on January 1, 2025. The bonds have semi-annual interest payments at 4% per annum due on December 31st and June 30th. The bonds mature on December 31, 2029 and were issued to yield 5% per annum. What amount would Ajax record for interest expense when making the first interest payment on June 30, 2025?

Question 7 options:

$69,208

$30,000

$31,347

$35,859

Solutions

Expert Solution

The correct option is: $35,859.

Explanation:

Calculate the issue price, as follows:

Calculate the discount on bonds, as follows:

Now prepare the amortization schedule, as follows:

Record the journal entry as follows:

Therefore, the interest expense is $35,859.

ekkarill92 answered 2 years ago
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