Devon Harris Company sells 10% bonds having a maturity value of $2,000,000 for $1, 855, 816. The bonds are dated January 1, 2017, and mature January 1, 2022. Interest is payable annually on January 1. Set up a schedule of interest expense and discount amortization under the straight-line method. (Round answers to the nearest cent.)

# Beg. Value cash outlay  Int expense AmortizationEnd Value

1    1,855,816200,000     228,836.828,836.8      1,884,653

2   1,884,653200,000     228,836.828,836.8       1,913,490

3    1,913,490200,000     228,836.828,836.8      1,942,326

4   1,942,326200,000     228,836.828,836.8        1,971,163

5     1,971,163200,000     228,836.828,836.8     2,000,000

Explanation:

We subtract the cash proceeds form the face value to knwo the discount/premium

2,000,000 - 1,855,816 = 144,184

as this is striaght-line method it will be split equally between each interest payment

144,184 / 5 = 28,836.8

This will increase the carrying value getting closer to the face valeu as we reach maturity date

the cash outlay per year will be 2,000,000 x 10% = 200,000

The interest expense is the sum of the cash oputlay (paid to bondholder each year) and the amortization on the bonds discount

answer/// product differentiation;

the answer is "b.the increased supply will create a surplus. "

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