Trego Company issued, on December 31, 2018, $1,000,000 face value, 4%, 5-year bonds. Interest will be...

Trego Company issued, on December 31, 2018, $1,000,000 face value, 4%, 5-year bonds. Interest will be paid semiannually each June 30 and December 31. The bonds sold at a price of 102; Trego uses the straight-line method of amortizing bond discount or premium. The amount of bond interest expense recognized by Trego Company in 2019 with respect to these bonds is

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Expert Solution

Bond issue price	1020000	=1000000*1.02
Premium on issue	20000	=1020000-1000000

Cash interest paid in 2019	40000	=1000000*4%
Less: Premium amortized in 2019	4000	=20000/5
Interest expense recognized in 2019	36000

ekkarill92 answered 2 years ago

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