On July 1, year 1, Planet Corporation sold Ken Company 10- year, 8% bonds with a face

Question:

On July 1, year 1, Planet sold Ken Company 10- year, 8% bonds with a face amount of $ 500,000 for $ 520,000. The market rate was 6%. The bonds pay interest semiannually on June 30 and December 31. For the six months ended December 31, year 1, what amount should Planet report as bond interest expense and long- term liability in the and income statement for Year 1?
Balance Sheet Income Statement
a. $ 511,200 …………………………….. $ 31,200
b. $ 500,000 …………………………….. $ 20,000
c. $ 504,400 …………………………….. $ 4,400
d. $ 515,600……………………………..$ 15,600 Balance Sheet
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