HW Question 3

On 2-1-2025, Karstan Corporation issued $400,000 (face value) of 4% bonds payable (i.e., the stated rate is 4%) for $340,492. The market rate of interest on similar bonds was 6% at the time of issue (i.e., 2-1-2025). Each bond has a face value of $1,000. The bonds are dated 2-1-2025 and mature 1-31-2035. Interest is paid semiannually on 7-31 and 1-31. You may want to prepare an amortization schedule, as of the time of issue, for the first couple periods. Related to the bonds, what will be the amount of interest expense reported by Karstan Corporation on its 2025 income statement ? O $9,333 $16.000 O $12.000 O $13,642 O $11.928 O $15,355 $8,000 O $14.667 O $18,782 $10,667 O $13,333 $17,069