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Exercise 10-4 Straight-Line: Amortization of bond discount LO P2 Tano Company issues bonds with a par...

Exercise 10-4 Straight-Line: Amortization of bond discount LO P2

Tano Company issues bonds with a par value of $87,000 on January 1, 2019. The bonds’ annual contract rate is 7%, 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 $80,375.

1. What is the amount of the discount on these bonds at issuance?
2. How much total bond interest expense will be recognized over the life of these bonds?
3. Prepare a straight-line amortization table for these bonds.

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