Solved: How much interest expense will appear on income statement, Auditing

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How much interest expense will appear on income statement

Response to the following problem:

Soap Company issued $200,000 of 8%, 5-year bonds on January 1, 20X6. The discount on issuance was $12,000. Bond interest is paid annually on December 31. On December 31, 20X8, Pumice Company purchased one-half of the outstanding bonds for $96,000. Both companies use the straight-line method of amortization.

How much interest expense will appear on the December 31, 20X9, consolidated income statement?

How do you calculate the answer?

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