Correct answer----$60,800
Bonds are issued at Premium. The amount of interest expense will
be cash paid for interest minus premium to be amortized in the year
using Straight line method.
|
Period |
Cash payment (Credit) |
Interest Expense (Debit) |
Discount on bond |
Premium on bond balance |
Bonds payable Carrying Value |
|
At issue |
|
|
|
$
16,000 |
$ 8,16,000 |
|
Year 2017 end |
$
64,000 |
$ 60,800 |
$ 3,200 |
$
12,800 |
$ 8,12,800 |
|
Year 2018 end |
$
64,000 |
$ 60,800 |
$ 3,200 |
$ 9,600 |
$ 8,09,600 |
|
Year 2019 end |
$
64,000 |
$ 60,800 |
$ 3,200 |
$ 6,400 |
$ 8,06,400 |
|
Year 2020 end |
$
64,000 |
$ 60,800 |
$ 3,200 |
$ 3,200 |
$ 8,03,200 |
|
Year 2021 end |
$
64,000 |
$ 60,800 |
$ 3,200 |
$
- |
$ 8,00,000 |
Year 2017 interest expense = $64000-3200=$60800
