On January 1, 2010, Huber Co.sold 12% bonds with a face value of $600,000.The bonds mature in five years, and interest is paid semiannually on June 30 and December 31.The bonds were sold for $646,200 to yield 10%.Using the effective-interest method of amortization, interest expense for 2010 is

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The interest expense is calculated using the effective interest rate of 10% on the carrying amount of the bonds. For the first period, the interest expense is $646,200 * 5% = $32,310. For the second period, the carrying amount is adjusted by the amortization of the premium, and the interest expense is recalculated. The total interest expense for 2010 is $64,436.