Question

grainley inc sold 300 bonds at face value of $1000 on the issue date of feb 1, 2016. the face interest rate is 5% interest will be paid feb 1 and aug 1 of ea year. the same bonds remain outstanding during all of the second year, 2017. after all of the entries related to interest have been posted, on dec 31,2017, the balance in the interest expense account will equal

just need the formula /steps.

this is the exact word for word how it was presented

Answer 1

Journal entries
Date	Account titles	Debit	Credit
Feb 1, 2016	Cash (1000*300)	300,000
	Bond payable		300,000
	(To record issued of bond payable at par.)
Aug 1, 2016	Interest expense (300000*5%*6/12)	7,500
	Cash		7,500
	(To record semiannual interest expense paid) (Feb to July = 6 months)
Dec 31, 2016	Interest expense (300000*5%*5/12)	6,250
	Interest payable		6,250
	(To record accrued interest expense) (Aug to Dec = 5 months)
Feb 1, 2017	Interest payable	6,250
	Interest expense (300000*5%*1/12)	1,250
	Cash		7,500
	(To record semiannual interest expense paid) (Jan = 1 months)
Aug 1, 2017	Interest expense (300000*5%*6/12)	7,500
	Cash		7,500
	(To record semiannual interest expense paid) (Feb to July = 6 months)
Dec 31, 2017	Interest expense (300000*5%*5/12)	6,250
	Interest payable		6,250
	(To record accrued interest expense) (Aug to Dec = 5 months)