Victor company issued bonds with a $450,000 face value and a 6% stated rate of interest on january 1, year 1. the bonds carried a 5-year term and sold for 95. victor uses the straight-line method of amortization. interest is payable on december 31 of each year. the amount of interest expense appearing on the december 31, year 3 income statement would be:

Total interest expense: 31,500

Explanation:

As the company used straight line method the interest on all the years are the same.

proceeds427,500 (450,000 x 95/100)

face value(450,000)

discount on bonds payable(22,500)

This will be depreciate over 5 years:

22,500 / 5 = 4,500

Then, the interest expense will be the amortization of the discount and the cash proceeds:

450,000 x 6% = 27,000

Total interest expense: 31,500

you have to put the parentheses like this:

in fact, you have to perform the operation inside parentheses first, and then proceed in order: