On January 1 of the current year, the Barton Corporation issued 10% 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, five years from now. Barton records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 is
A) $10,900
B) $18,200
C) $21,800
D) $29,000

Question

Quizplus · Accepted Answer

Bond interest expense = {[(Face value of bonds × 10% × 1/2 year)] + [Discount on issue ÷ (5 years × 2)]} × 2 = {[$200,000 × 10% × 1/2 year] + [($200,000 - $191,000) / (5 × 2)]} × 2 = ($10,000 + $900) × 2 = $21,800

On January 1 of the Current Year, the Barton Corporation