Herman Company Received Proceeds of $565,500 on 10-Year, 8% Bonds

question 205

Multiple Choice

Herman Company received proceeds of $565,500 on 10-year, 8% bonds issued on January 1, 2012. The bonds had a face value of $600,000, pay interest semi-annually on June 30 and December 31, and have a call price of 101. Herman uses the straight-line method of amortization. What is the amount of interest expense Herman will show with relation to these bonds for year ended December 31, 2014?

• A) $48,000
• B) $45,240
• C) $51,450
• D) $44,550

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