Question

On January 1, Elias Corporation issued 10% bonds with a face value of $68,000. The bonds are sold for $65,960. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 10 years from now. Elias records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 of the first year is

Answer 1

the bond interest expense for the year ended December 31 of the first year is $7,004

Step-by-step explanation:

The computation of the bond interest expense is shown below:

​​Interest expense ($68,000 × 10%) $6,800

Add: Amortization expense {($68,000 - $65,960) ÷ 10} $204

Total interest expense $7,004

Hence, the bond interest expense for the year ended December 31 of the first year is $7,004