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On July 1, 2016, Garden Works, Inc. issued $301,100 of ten-year, 7% bonds for $308,500. The...

On July 1, 2016, Garden Works, Inc. issued $301,100 of ten-year, 7% bonds for $308,500. The bonds were dated July 1, 2016, and semi-annual interest will be paid each December 31 and June 30. Garden Works Inc. uses the straight-line method of amortization. Which of the following statements is incorrect?

The semi-annual interest expense is $740 less than the semi-annual interest payment.

The market rate of interest was less than the coupon rate of interest on July 1, 2016.

The interest expense during the life of the bonds is $7,400 less than the cash interest payments during the life of the bonds.

The book value of the bond liability decreases by $740 per year.

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On July 1, 2016, Garden Works, Inc. issued $301,100 of ten-year, 7% bonds for $308,500. The bonds were dated July 1, 2016, and semi-annual interest will be paid each December 31 and June 30. Garden Works Inc. uses the straight-line method of amortization. Which of the following statements is incorrect?
Answer:

The market rate of interest was less than the coupon rate of interest on July 1, 2016. Because of Market Interest rate is not given in question.

Actual Interest amount is =$301100*7%*6/12

Interest =$10538.5/-

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