On january 1, 2019, a company issued $400,000 of 10-year, 12% bonds. the interest is payable semiannually on june 30 and december 31. the issue price was $413,153 based on a 10% market interest rate. the effective-interest method of amortization is used. the interest expense for the six-month period ending december 31, 2019 is closest to:

interest expense for 6 months is $ 20658

Explanation:

Given data:

Total price of bond $400,000

Duration of bonds is 10 year

interest rate on bond is 12%

issue price on bond is $413,153 at 10% market rate

The calculation for interest expense for 6 months is given below:

=

= 20658

The six months is taken from Jan 1  to 30 th June 2016

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