Discount-Mart issued ten thousand $1,000 bonds on January 1, 2018. The bonds have a 10-year term and pay interest semiannually. This is the partial bond amortization schedule for the bonds.
- What is the interest expense on the bonds for the year ended December 31, 2019?

Question

Discount-Mart issued ten thousand $1,000 bonds on January 1, 2018. The bonds have a 10-year term and pay interest semiannually. This is the partial bond amortization schedule for the bonds. 
- What is the interest expense on the bonds for the year ended December 31, 2019?

Quizplus · Accepted Answer

Semiannual effective rate = $345,639 / $8,640,967 = 4%
Interest expense = $349,363 + ($8,783,433 × 4%) = $700,700

Discount-Mart Issued Ten Thousand $1,000 Bonds on January 1, 2018