Question

Ferris Wheeler Co. issued $10,000 of bonds on January 1, 2018. The bonds pay interest semiannually. This is a partial bond amortization schedule for the bonds.
Effective Decrease in Outstanding
Payment Cash interest balance balance
1 400 409 9 9080
2 400 409 9 9089
3 400 409 9 9098
4 400 9107
What is the interest expense on the bonds for the year ended December 31, 2019?
a. $819
b. $818
c. $800
d. $809

Answer 1

Answer:

$818

Explanation:

In order to calculate interest expense on the bonds for the year ended December 31, 2019, we have to add the interest expense that occurred in the year 2019. As Ferris Wheeler Co. pays interest semiannually with the amount of $409. Two semiannual payment would be

Interest Expense for Dec 31,2019 = $409 +$409

Interest Expense for Dec 31,2019 = $818