A corporation issues $500,000, 8%, 5-year bonds on January 1, 2018, for $479,000. Interest is paid annually on January 1. If the corporation uses the straight-line method of amortization of bond discount, the amount of bond interest expense to be recognized in December 31, 2018's adjusting entry is

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The bond discount of $21,000 ($500,000 - $479,000) is amortized over 5 years, resulting in an annual amortization of $4,200. The annual interest payment is $40,000 (8% of $500,000). Therefore, the total bond interest expense for the year is $44,200 ($40,000 + $4,200).

A Corporation Issues $500,000, 8%, 5-Year Bonds on January 1