Quatro Co. issues bonds dated January 1, 2021, with a par value of $400,000. The bonds’ annual contract rate is 13%, 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 $409,850.

1. What is the amount of the premium 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 like Exhibit 14.11 for these bonds.

Data From Exhibit 14.11

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EXHIBIT 14.11 Semiannual Unamortized Carrying Period-End Premium Value Straight-Line Amortization of Bond Premium (0) 12/31/2021 ... $3,600 $103,600 (1) 6/30/2022... 2,700 102,700 (2) 12/31/2022 ... 1,800 101,800 (3) 6/30/2023 ... 900 100,900 During the bond life, carrying value is adjusted to par and the amortized (4) 12/31/2023 ... 100,000 -premium to zero.