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home / study / business / accounting / accounting questions and answers / On January 1, 2018, Lyle's Limeade Issues 4%, 10-year Bonds With A Face Amount Of $90,000 For ... Your question has been answered Let us know if you got a helpful answer. Rate this answer Question: On January 1, 2018, Lyle's Limeade issues 4%, 10-year bonds with a face amount of $90,000 for $82... On January 1, 2018, Lyle's Limeade issues 4%, 10-year bonds with a face amount of $90,000 for $82,985, priced to yield 5%. Interest is paid semiannually. What amount of interest expense will be recorded in the December 31, 2018, annual income statement?

Answer 1

	Amortization Schedule
		interest	interest	discount	Carrying
	period	paid	exp 2.5%	amortized	value
	1-Jan				82,985
	30-Jun	1800	2075	275	83260
	31-Dec	1800	2081	281	83541
	total		4156
	interest paid 90,000*4%*1/2=			1800
	interest expense 82,985*2.5%=			2075
		(82985+275)*2.5%=		2081
	thus interest expense to be recorded in annual income
	statement will be $4,156