Amortization of Bond Discount Todd Corporation issued $400,000 of 4-year bonds with a stated interest rate of 7 percent. Interest is payable at the end of each year.

The bonds were issued on January | and $382,000 was received. Assuming straight-line amortization of the bond discount 1s used in computing interest expense:

a. What amount of interest expense will Todd Corporation report annually?

b. Prepare a bond interest and amortization table for the life of the bonds, as illustrated in Exhibit 11-3.

c. What is the book value of the bonds at the end of the second year?