Stanford issues bonds dated Jan 1, 2010, with a par value of $500,000. The bonds annual contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The bonds mature in 3 years. The annual market rate at the date of issuance is 12% and the bonds are sold for $463,140.
1. What is the amount of the premium on these bonds?
2. How much total bond interest expense will be recognized over the life of these bonds?
3. Prepare an amortization table for these bonds; use the effective interest mthod to amortize the discount.