A corporation issues $500,000, 10%, 5-year bonds on January 1, 2010, 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, 2010's adjusting entry is

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To calculate the bond interest expense, we first need to find the annual bond interest payment, which is calculated as follows:

Annual interest payment = Face value of bond x Coupon rate = $500,000 x 10% = $50,000

Next, we need to calculate the bond discount amortization for the year 2010. Since the company is using the straight-line method of amortization, we can simply divide the total discount of $21,000 ($500,000 - $479,000) by the number of years the bond is outstanding, which is 5. Therefore, the bond discount amortization for 2010 is:

Bond discount amortization for 2010 = Total bond discount / Number of years outstanding = $21,000 / 5 = $4,200

Finally, we can calculate the bond interest expense for the year 2010 by adding the annual interest payment and the bond discount amortization for the year. Therefore, the bond interest expense to be recognized in December 31, 2010's adjusting entry is:

Bond interest expense for 2010 = Annual interest payment + Bond discount amortization for 2010 = $50,000 + $4,200 = $54,200

A Corporation Issues $500,000, 10%, 5-Year Bonds on January 1