On May 1 of the current year, Cassandra Corp. issued $600,000 of 4% bonds payable at...

On May 1 of the current year, Cassandra Corp. issued $600,000 of 4% bonds payable at par with interest payment dates of April 1 and October 1. In its income statement for the current year ended December 31, what amount of interest expense should Cassandra report?

$10,000
$4,000
$14,000
$16,000

Expert Solution

Interest expense for 8 months (May to December) = Issued bonds payable * Interest rate * (8/12)

= $600,000 * 4% * (8/12)

= $16,000

Interest expense should Cassandra report $16,000.

ekkarill92 answered 2 years ago

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