Bond Issued at a Discount Bell Corporation issued a 5-year bond with a par value of $700,000 for

$624,302 on January 1. The bond had a stated interest rate of 9 percent. The current market rate for similarly rated bonds was 12 percent at the time of issue. Assuming the bond pays interest annually on December 31, and straightline amortization of the bond discount is used in computing interest expense:

a. What amount of interest expense will Bell 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 fourth year?