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What amount of interest expense should be recorded

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Question - PowerTap Utilities is planning to issue bonds with a face value of $1,200,000 and a coupon rate of 8 percent. The bonds mature in 8 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. PowerTap uses the effective-interest amortization method. Assume an annual market rate of interest of 10 percent.

Required - What amount of interest expense should be recorded on June 30 and December 31 of this year?

Reference no: EM132783353

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