Wendy Company issued $600000 of 8% 5-year bonds at 105. Assuming straight-line amortization and annual interest payments how much bond interest expense is recorded on the next interest date?

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The bond interest expense is the annual interest payment plus the amortization of the premium divided by the number of interest payments in a year. The annual interest payment is calculated by multiplying the face value of the bond by the stated interest rate, which in this case is 8%. Therefore, the annual interest payment is $600,000 x 8% = $48,000. The premium is the amount by which the bond was issued above its face value, which in this case is 105 - 100 = 5%. The premium is amortized evenly over the life of the bond, so the annual premium amortization is $600,000 x 5% / 5 years = $30,000. Therefore, the bond interest expense is $48,000 + $30,000 = $42,000.

Wendy Company Issued $600000 of 8% 5-Year Bonds at 105