Answer:
Explanation:
First of all, calculate discount on the bond:
Discount = Face value - issue price = 80,000,000 - 69,057,808 = 10,966,224
Also, since interest is paid semiannually we need to multiply 20 by 2 = 40 periods
Then, we need to find amortized discount per period = 10,966,224/40 = 274,155.6
Now, identify interest expense on June 30:
Interest expense = interest paid + discount amortized per period
(80,000*0.03*6/12) + 274,155.6 = 1,200,000+274,155.6 = 1,474,155.6
interest expense on Dec 31:
(80,000*0.03*6/12) + 274,155.6 = 1,200,000+274,155.6 = 1,474,155.6
Total expense on Dec 31 = interest expense on June 30 + interest expense on Dec 31 = 1,474,155.6 + 1,474,155.6 = 2,948,311.20
