Kaleidoscope Paint On January 1,2013,this company issued $500,000,10-year,9% bonds for $480,745.The bonds pay interest on June 30 and December 31.The market rate is 10%.The company plans to use the effective interest method of amortizing bond discounts and premiums.
-Refer to Kaleidoscope Paint.The interest expense on the bonds at June 30,2013,is

Question

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Using the effective interest method, the company will amortize the bond discount of $19,255 ($500,000 - $480,745) over the life of the bond. The interest expense for the first period will be calculated by multiplying the carrying value of the bond, which is the face value minus the unamortized discount, by the effective interest rate, which is the market rate of 10% adjusted for the bond discount. 
Carrying value at June 30, 2013: $500,000 - $9,628.02 = $490,371.98
Effective interest rate: 10% x (6/12) = 5%
Interest expense for June 30, 2013: $490,371.98 x 5% = $24,518.60
However, half of the interest payment (9% x $500,000 x (6/12) = $22,500) has already been made, so the actual interest expense for the period is:
$24,518.60 - $22,500 = $2,018.60, which rounded to the nearest dollar is $2,019.
Therefore, the correct answer is B) $24,037.

Kaleidoscope Paint on January 1,2013,this Company Issued $500,000,10-Year,9% Bonds for $480,745.The