Tano issues bonds with a par value of $180,000 on January 1, 2008. The bonds' annual contract rate is 8%, 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 10%, and the bonds are sold for $170,862.

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.)

3. Use the straight-line method to amortize the discount for these bonds like the one in Exhibit (Leave no cells blank - be certain to enter "0" wherever required. Round your answer to the nearest dollar amount. Omit the "$" sign in your response.)

Transcribed Image Text:

Semiannual Unamortized Period-End Discount Carrying Value (0) 1/01/2008 (1) 6/30/2008 (2) 12/31/2008 (3) 6/30/2009 (4) 12/31/2009 (5) 6/30/2010 (6) 12/31/2010