Question

On January 1, Elias Corporation issued 11% bonds with a face value of $77,000. The bonds are sold for $74,690. 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

$8,470

Explanation:

Relevant data provided

Face value = 11%

Issued bonds percentage = $77,000

The computation of bond interest expense is shown below:-

Bond interest expense = Face value × Issued bonds percentage

= $77,000 × 11%

= $8,470

Therefore for computing the bonds interest expenses we simply multiply the face value with issued bonds percentage.