Cubs Corporation issues $550,000,10%,5-year bonds on January 1,2019 for $489,000.Interest is paid annually on January 1.If Cubs Corporation uses the straight-line method of amortization of bond discount,the amount of interest expense recorded at December 31,2019 would be:

Question

Quizplus · Accepted Answer

Discount = $550,000 - $489,000 = $61,000
($550,000 × 10%)+ ($61,000 ÷ 5)= $67,200

Cubs Corporation Issues $550,000,10%,5-Year Bonds on January 1,2019 for $489,000