Par value of bonds = $880,000
Issue price =96
Cash received from issuance of bonds = Par value of bonds x Issue price
= 880,000 x 96%
= $844,800
Discount on issue of bonds = Par value of bonds- Cash received from issuance of bonds
= 880,000-844,800
= $35,200
Semi annual interest payment = Par value of bonds x Interest rate x 6/12
= 880,000 x 6% x 6/12
= $26,400
Total interest payment during the life of bonds = Semi annual interest payment x Number of semi annual interest payment period
= 26,400 x 20
= $528,000
Total interest expense = Total interest payment during the life of bonds+ Discount on bonds payable
= 528,000+35,200
= $563,200
Kindly comment if you need further assistance. Thanks‼!
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