Lewis Company sold $500,000 of bonds at 97 on an interest payment date. Assuming the bonds will

Question:

Lewis Company sold $500,000 of bonds at 97 on an interest payment date. Assuming the bonds will be retired in 10 years and interest is paid annually, calculate the amount of cash that will be received and paid by Lewis in the first year, as well as the interest expense that will be recognized in that year. The bonds carry a stated interest rate of 5 percent.