Horton Enterprises issued $100,000, 10 year, 6% bonds payable on 1/1.Interest is payable each 6 months 1/1 and 7/1.The discount or premium is amortized using the straight line method.Journalize the issuance, first interest payment, and redemption of the bonds at maturity under the three conditions listed:
Journalize the issuance at par value.
Journalize the selling price of $90,000 when the market rate is 7 %.
Journalize the selling price is $105,000 when the market rate is 5.5%.
Which condition results in the most interest expense? Why (explain in detail)?