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Homework answers / question archive / On January 1, 2020, SPT Corp

On January 1, 2020, SPT Corp

Finance

On January 1, 2020, SPT Corp. sold $500,000, 4% bonds for $477,102 to yield 6% interest is payable semi-annually on January 1 and July 1. SPT Corp. uses the effective-interest method of amortizing bond discount. what amount should SPT Corp. report as interest expense for the six months ended June 30, 2020

 

Please solve this step by step using a financial calculator and how to input all the numbers. Thank you so much!!!

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Computation of Interest Expenses SPT Corp. should report for the six months ended June 30, 2020:

Interest Expenses for the Six Months = $477,102 * 6%/ 2 

=  $477,102 * 3%

  = $14,313.06

SPT Corp. should report $14,313.06 as interest expense for the six months ended June 30, 2020.

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