Answer:
The interest expense for 2017 is $214,836
Explanation:
Given data from the question;
face value of sold bonds = $2,000,000
Number of years the bond matures = 5 years
Interest paid semiannually of 10%; 5%
Amount later sold = $2,154,500
To yield = 10%
Using effective-interest method of amortization;
Interest expense = the effective-interest rate × the bond's carrying value for each period
= $2,154,500 × 5%
= $2,154,500 × 0.05
= $107,725
[$2,154,500 - ($120,000 - $107,725)] × 0.05
= $107,111
The interest expense for 2017 = $107,725 + 107,111
= $214,836
