1) Blue Builders Company issue bonds with a par value of $280,000 on January 1, 2020. 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 12%, and the bonds are sold for $244,000.
What is the amount of the discount on these bonds at issuance?
How much of the discount will be amortized over 6 months?
How much interest expense will be recognized over a 6-month period?
