A company issued 10-year,7% bonds with a face value of $100,000.The company received $97,947 for the bonds.Using the straight-line method of amortization,the amount of interest expense for the first interest period is:
A) $7,000.00
B) $7,205.30
C) $6,794.70
D) $2,053.00

Question

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The bond discount is $2,053 ($100,000 - $97,947). Using straight-line amortization over 10 years, the annual amortization is $205.30 ($2,053 / 10). The interest expense for the first period is the cash interest ($7,000) plus the amortization ($205.30), totaling $7,205.30.

A Company Issued 10-Year,7% Bonds with a Face Value of $100,000.The