Stanford issues bonds dated January 1, 2008, with a par value of $500,000. The bonds' annual contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 12%, and the bonds are sold for $463,140.

Required:

1. What is the amount of the discount on these bonds at issuance? (Omit the "$" sign in your response.)

2. How much total bond interest expense will be recognized over the life of these bonds? (Omit the "$" sign in your response. Round your answer to the nearest dollar amount.)

3. Use the effective interest method to amortize the discount for these bonds like the one in Exhibit (Leave no cells blank - be certain to enter "0" wherever required. Remember that the unamortized discount must be fully eliminated by the maturity date. Please calculate Bond interest expense in the final period as the amount of cash paid minus the amount of the previously unamortized discount. Round your answer to the nearest dollar amount. Omit the "$" sign in your response.)

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Semiannual Interest Cash Interest Bond InterestDiscount Unamortized Carrying Period-End 1/01/2008 6/30/2008 12/31/2008 6/30/2009 12/31/2009 6/30/2010 12/31/2010 Paid Expense Amortization Discount Value