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A company issues $60,000 of 6%, 5-year bonds dated January 1 that pay interest semiannually on June 30 and December 31 each year. If the issuer accepts $62,000 for the bonds, the premium on bonds payable will _________________ total interest expense recognized over the life of the bond by $ ______________.

Respuesta :

Answer:

The premium on the bonds payable will decrease the total interest expense recognized over the life bond by $2000

Explanation:

The premium on bonds payable is the excess of cash proceeds received from the bond's issuance over the face value.

cash proceeds=$62,000

face value=$60,000

premium on bonds payable=$62,000-$60,000

premium on bonds payable=$2000

This will decrease the total interest expense recognized over the life bond by $2000

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