Question

On January 1 of the current year, the Barton Corporation issued 10% bonds with a face value of $200,000. The bonds are sold for $191,000. 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
$21,800

$10,900

$18,200

$29,000

Answer 1

Answer:

$21,800.

Explanation:

($200,000 * 0.10 * 6/12) = 10,000 = Semiannual interest

($200,000 - $191,000) = 9,000

(9,000 / 10) = 900 = Discount on bonds payable

(10,000 + 900) = 10,900= Semiannual interest expense

(10,900 * 2) = 21,800 = Year interest expense