On January 1, Elias Corporation issued 10% bonds with a face value of $68,000. The bonds are sold for $65,960. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 10 years from now. Elias records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 of the first year is

the bond interest expense for the year ended December 31 of the first year is $7,004

Explanation:

The computation of the bond interest expense is shown below:

​​Interest expense ($68,000 × 10%) $6,800

Add: Amortization expense {($68,000 - $65,960) ÷ 10} $204

Total interest expense $7,004

Hence, the bond interest expense for the year ended December 31 of the first year is $7,004

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