Arif Corporation sold $400,000 of 12 percent, 10-year bonds at face value on September 1, 2011. The

Question:

Arif Corporation sold $400,000 of 12 percent, 10-year bonds at face value on September 1, 2011. The issue date of the bonds was May 1, 2011.

1. Record the sale of the bonds on September 1 and the first semiannual interest payments on November 1, 2011.

2. The company’s fiscal year ends on December 31, and this is its only bond issue. What is the bonds interest expense for the year ended December 31, 2011?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...