A corporation issues $500,000 of 8%, 5-year bonds on January 1, 2021, 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, 2021's adjusting entry is

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The bond interest expense includes the actual interest paid plus the amortization of the discount. The annual interest paid is $500,000 * 8% = $40,000. The total discount on the bonds is $500,000 - $479,000 = $21,000. Over 5 years, the annual amortization of the discount is $21,000 / 5 = $4,200. Therefore, the total bond interest expense for the year is $40,000 + $4,200 = $44,200.

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