Question: On June 3 0 , 2 0 2 5 , Michael Jones Company issued $ 3 , 4 9 3 , 0 0 0 .

On June

30, 2025,

Michael Jones Company issued $

3, 493, 000.00

face value of

14 %, 20 -

year bonds at $

4, 018, 560.00,

a yield of

12 % .

Jones uses the effective

-

interest method to amortize bond premium or discount. The bonds pay semiannual interest on June

30

and

-

December

31 .

1.1 .

What amount of interest expense is reported for

2026 ? (

Round answer to

2

decimal places, eg

. 38, 548.25 .)

Interest expense reported for

2026 .

2 .

Will the bond interest expense reported in

2026

be the same as

,

greater than, or less than the amount that would be reported if the straight

-

line method of amortization were used?

3 .

The bond interest expense reported in

2026

will be greater than the amount that would be reported if the straight

-

line me

.

4.

Determine the total cost of borrowing over the life of the bond.

(

Round answer to

0

decimal

places, eg

. 38, 548 .)

Total cost of borrowing over the life of the bond

.

5.

Will the total bond interest expense for the life of the bond be greater than, the same as

,

or less than the total interest expense if the straight

-

line method of amortization were used?The total bond interest expense for the

life of the bond will be less than the total interest expense if the straight

-

line me.

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