On january 1, 2018, album co. issued $200,000 of ten-year bonds. interest is payable semi-annually on june 30 and december 31. the bonds were sold for $185,953. a journal entry was prepared on june 30, the first interest payment date, to record interest expense of $13,016 and cash interest paid of $12,000. what is the annual stated interest rate for the bonds?

12%

Explanation:

Album Co. paid $12,000 for interest, and that is the stated interest of the bonds.

Stated interest = $12,000 / $200,000 = 6% semiannually, therefore the annual stated interest is 6% x 2 = 12%

The stated rate is applied to the face value of the bonds, regardless of their selling or trading price.

none

explanation:

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