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How much interest expense will knollwood show

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Just divide the annual interest rate by two and count the periods as the number of six-month periods. Knollwood Corp. issued $200,000 of 6% per year, 20-year bonds at 98 on January 1, 2010. The market rate of interest was approximately 6.5%. Interest is paid on June 30 and on December 31. The company uses the effective interest method of amortization.

Problem 1: How much interest expense will Knollwood show on the income statement for the year ending December 31, 2010?

Problem 2: What is the carrying value of the bonds on the balance sheet at December 31, 2010?

Reference no: EM132670775

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