Question

On January 1, 2018, Quinton Corporation issued 8% bonds with a face value of $100,000. The bonds are sold for $98,000. The bonds pay interest semiannually on June 30 and December 31, and the maturity date is December 31, 2022. Quinton Corporation records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31, 2018, is a.$8,400. b.$7,600. c.$8,000. d.$8,200.

Answer 1

a.$8,400

Step-by-step explanation:

Amortization of bonds discount = (100000 - 98000)/5years

= 2000/5

= 400

Interest expenses = interst on face value + amortization of bond discount

= (100000*8%) + 400

= $8400

Therefore, The bond interest expense for the year ended December 31, 2018, is $8400.