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OLEGan [10]
3 years ago
14

On January 1, the Kings Corporation issued 10% bonds with a face value of $96,000. The bonds are sold for $94,080. The bonds pay

interest semiannually on June 30 and December 31 and the maturity date is December 31, ten years from now. Kings records straight-line amortization of the bond discount. Determine the bond interest expense for the year ended December 31 of the first year is.
Business
1 answer:
sleet_krkn [62]3 years ago
5 0

Answer:

9,792 total interest expense

Explanation:

face value 96,000

issued at    94,080

<em>discount        1,920</em>

<u><em>amortization of the bond:</em></u>

discount/total payment

10 years atsemiannual payment = 20 payment

1,920/20 = 96

<u><em>cash proceed:</em></u>

96,000x 10%/2 = 4,800

discount                    96

<u>interest expense  4,896 per payment</u>

2 payment per year 9,792 total interest expense

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