Question

On January 1 of the current year, the Barton Corporation issued 12% bonds with a face value of $88,000. The bonds are sold for $85,360. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, five years from now. Barton records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 is a.$2,640 b.$11,088 c.$10,560 d.$880

Answer 1

b.$11,088

Step-by-step explanation:

The computation of the interest expense is shown below

= Cash interest + discount amortized

= ($88,000 × 12%) + ($88,000 - $85,360) ÷ 5 years

= $10,560 + $528

= $11,088

Hence, the interest expense is $11,088

Therefore the correct option is b.

We simply applied the above formula so that the correct value could come

And, the same is to be considered