A corporation issued $600,000, 10%, 7-year bonds on January 1, 2015 for $648,666, which reflects an effective-interest rate of 7%. Interest is paid annually on January 1. If the corporation uses the effective-interest method of amortization of bond premium, the amount of bond interest expense to be recognized on December 31, 2015, is

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The bond interest expense is calculated using the effective interest rate on the carrying amount of the bond. The carrying amount at the beginning is $648,666, and the effective interest rate is 7%. Therefore, the interest expense for the year is $648,666 * 7% = $45,407.

A Corporation Issued $600,000, 10%, 7-Year Bonds on January 1