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On January 1 of the current year, Franklin Ltd. issued $500,000 (par value) 10%, six year bonds when the market rate was 9%, receiving $522,430

On January 1 of the current year, Franklin Ltd. issued $500,000 (par value) 10%, six year bonds when the market rate was 9%, receiving $522,430 cash proceeds. Interest is payable annually on December 31.The corporation uses the effective interest method for amortization of bond premium or discount.

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a. Calculate the interest expense for the first year.

b. Calculate the interest expense for the second year.

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