On 2010 January 1, the Alvarez Company issued USD 400,000 face value of 8 percent, 10-year bonds for…

On 2010 January 1, the Alvarez Company issued USD 400,000 face value of 8  percent, 10-year bonds for cash of USD 328,298, a price to yield 11 percent. The bonds pay interest semiannually and mature on 2020 January 1. Using the effective interest rate method, the bond interest expense for the first six months of 2010 would be:

a. USD 36,113.

b. USD 18,056.

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c. USD 32,000.

d. USD 16,000.

 

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