On January 1,Micha's Jewelers issued thirty $1,000,ten-year,6% bonds for $29,400.Using straight-line amortization,the interest expense for the first year is ________.

Question

Quizplus · Accepted Answer

The total discount on the bonds is $600 ($30,000 - $29,400). Using straight-line amortization over 10 years, the annual amortization is $60. The annual interest payment is $1,800 (6% of $30,000). Therefore, the interest expense for the first year is $1,860 ($1,800 + $60).

On January 1,Micha's Jewelers Issued Thirty $1,000,ten-Year,6% Bonds for $29,400