Stanford issues bonds dated January 1, 2015, with a par value of $253,000. The bonds annual contract rate is 6%, 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 8%, and the bonds are sold for $239,733.

1)What is the amount of the discount on these bonds at issuance?

2)How much total bond interest expense will be recognized over the life of these bonds?

Total Bond Interest expense

Amount repaid:

_________payments of__________

Par value at maturity______________

Total repaid 0

Less amount borrowed____________

Total bond interest expense__________

3)Prepare an Amortization table using the effective interest method to amortize the discount for these bonds.

Semiannual Interest Period-End	Cash Interest Paid	Bond Interest Expense	Discount Amortization	Unamortized Discount	Carrying Value
01/01/2015				$13,267	$253,000
06/30/2015	$7,590	$9,589	$1,999	11,268	253,000
12/31/2015	7,590	9,669	2,079	9,188	253,000
06/30/2016	7,590	9,752	2,162	7,026	255,162
12/31/2016	7,590	9,839	2,249	4,777	257,411
06/30/2017	7,590	9,929	2,339	2,433	259,750
12/31/2017	7,590	840	(6,750)		253,000
Total	$45,540	$58,807	$13,267