On January 1,a company issued a $500,000,10%,8-year bond payable,and received proceeds of $473,845.Interest is payable each June 30 and December 31.The company uses the straight-line method to amortize the discount.The amount of interest expense to be recorded on June 30 is $25,000.

The interest expense for a period includes both the cash interest payment and the amortization of the discount on the bond. The cash interest payment is calculated as the face value of the bond ($500,000) multiplied by the stated interest rate (10%), and then divided by 2 (since interest is paid semi-annually), which equals $25,000. However, the interest expense also includes the amortization of the bond discount, which is the difference between the face value ($500,000) and the proceeds received ($473,845), divided by the number of interest periods (16, for an 8-year bond with semi-annual payments). This amortization amount needs to be added to the $25,000 to get the total interest expense, which means the total will be more than $25,000.