Answer:
1. Cash proceed $210,000
2. Total Interest Expense $222,000
3. First year interest Expense $22,200
Explanation:
The bond is issued on discount and this discount will be expensed over the bond period until maturity.
As Selling price is the $87.5, So the cash proceed will be
1.
Cash Proceed = $240,000 x $87.50/ $100 = $210,000
2.
Discount Amount = $240,000 - $210,000 = $30,000
Total Interest on the bond = $240,000 x 8% x 10 = $192,000
Total Interest expense = $192,000 + $30,000 = $222,000
3.
Interest first year = $222,000 / 10 = $22,200
