Jackson Corporation issues $400,000,10%,five-year bonds at 103.The total interest expense over the life of the bonds is:

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The total interest expense is calculated as the sum of the interest payments over the life of the bond minus the premium received. The annual interest payment is $40,000 ($400,000 * 10%). Over five years, this totals $200,000. The bonds were issued at 103, meaning a premium of $12,000 ($400,000 * 3%). Therefore, the total interest expense is $200,000 - $12,000 = $188,000.

Jackson Corporation Issues $400,000,10%,five-Year Bonds at 103