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On January 1 of the current year, Barton Corporation issued 10%, 5-year bonds with a face value of $200,000. The bonds are sold for $191,000. The bonds pay interest semiannually on June 30 and December 31, and the maturity date is December 31, 5 years from now. Barton records straight-line amortization of the bond discount. The bond interest expense for the current year ended December 31 is

Sagot :

abiolataiwo2015

Answer:

$21,800

Explanation:

Calculation to determine The bond interest expense for the current year ended December 31 is

First step is to calculate the Semiannual interest

Semiannual interest=($200,000 * 0.10 * 6/12)

Semiannual interest = $10,000

Second step is to calculate the Discount on bonds payable

Discount on bonds payable=[($200,000 - $191,000)/10]

Discount on bonds payable=($9,000 / 10)

Discount on bonds payable=$900

Third step is to calculate the Semiannual interest expense

Semiannual interest expense=($10,000 + $900) Semiannual interest expense= $10,900

Now let calculate the bond interest expense

Bond interest expense=($10,900 * 2)

Bond interest expense=$21,800

Therefore The bond interest expense for the current year ended December 31 is $21,800

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