Mini-Exercise 7-4 Bonds payable-various issues LO 8 On July 1, 2013, $6.5 millio
ID: 2536236 • Letter: M
Question
Mini-Exercise 7-4 Bonds payable-various issues LO 8 On July 1, 2013, $6.5 million face amount of 7%, 10-year bonds were issued. The bonds pay interest on an annual basis on June 30 each year. The market interest rates were slightly higher than 7% when the bonds were sold. Required: a. How much interest will be paid annually on these bonds? (Enter your answer in whole dollars.) b. Were the bonds issued at a premium or discount? Discount Premium c. Will the annual interest expense on these bonds be more than, equal to, or less than the amount of interest paid each year? More than or Less than or Equal to
Explanation / Answer
a Annual interest = 6500000*7%= $455000 b The bonds issued at a discount c Annual interest expense More than he amount of interest paid