Jones company issued bonds with a $200,000 face value on january 1, year 1. the five-year term bonds were issued at 97 and had a 7½% stated rate of interest that is payable in cash on december 31st of each year. jones amortizes the bond discount using the straight-line method. based on this information: the amount of interest expense shown on jones's december 31, year 1 income statement would be:

interest expense  = = $16200

Explanation:

Given data:

face value of bonds is $200,000

stated interest rate is 7.5%

interest expense is given as

interest expense  =  cash payment + discount amortized

cash payment = face value × stated interest rate

                        = 200,000 × 7.5

Discount on bond =  face value  -  issue price

                              = 200000 - (200000 × 97%)

                              = $6000

interest expense  

interest expense  = = $16200

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