opCo issued 18000000 of 1000 par 15year 7 bonds which pay in

opCo issued $18,000,000 of $1000 par, 15-year, 7% bonds which pay interest semi annually. TopCo annual income statement will show the expense of: a. $1,260,000 b. $18,900 c. The amount declared by the board of directors as interest expense d. $1,260 e. $630,000

Solution

Option A is Correct

Annual Income Statement will show Interest Expense of $1260000 ($18000000 * 3.5% * 2)