Textbook Problem

Exercise Interest Payments and Interest Expense for Bonds (Straight Line)

On January 1, 2020, Perry Manufacturing issued bonds with a total face amount of $3,000,000 and a stated rate of 9%.

Required:

1. Calculate the interest expense for 2020 if the bonds were sold at par.
2. Calculate the interest expense for 2020 if the bonds were sold at a premium and the straight- line premium amortization for 2020 is $12,000.

3. Calculate the interest expense for 2020 if the bonds were sold at a discount and the straight- line discount amortization for 2020 is $33,000.