On January 1 of the current year, Elston Corporation issued $1,500,000 of 10% debenture bonds on a basis to yield 9%, receiving $1,567,290. Interest is payable annually on December 31 and the bonds mature in 6 years. The effective interest method is used.
(a) What is the interest expense for the first year?
(b) What is the interest expense for the second year?
Using the effective interest method, interest expense in year 1 is ...
The solution explains the calculation of interest expense for the first and second year