On July 1, 2013, Noble, Inc. issued 9% bonds in the face amount of $8,000,000, which mature on July 1, 2019. The bonds were issued for $7,648,000 to yield 10%, resulting in a bond discount of $352,000. Noble uses the effective-interest method of amortizing bond discount. Interest is payable annually on June 30. At June 30, 2015, Noble's unamortized bond discount should be

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The effective-interest method involves calculating interest expense on the carrying amount of the bond at the beginning of the period. The carrying amount of the bond initially is the issue price ($7,648,000). The bond discount ($352,000) is amortized over the bond's life to interest expense, increasing the carrying amount of the bond towards its face value ($8,000,000) by the maturity date. Given:- Face value of bonds = $8,000,000- Issue price = $7,648,000- Bond discount = $352,000- Annual coupon rate = 9%- Market rate (yield) = 10%- Bonds issued on July 1, 2013, and mature on July 1, 2019 (6 years)- Interest is payable annually on June 30To find the unamortized bond discount at June 30, 2015, we first need to calculate the interest expense for each year using the effective-interest method and then determine how much of the bond discount has been amortized by that date.1. Calculate the interest expense for the first year:Interest expense for the first year = Carrying amount at the beginning * Market rate= $7,648,000 * 10% = $764,8002. Calculate the actual cash paid for interest in the first year:Cash paid = Face value * Coupon rate= $8,000,000 * 9% = $720,0003. The difference is the amount of discount amortized in the first year:Amortized discount in the first year = Interest expense - Cash paid= $764,800 - $720,000 = $44,8004. Update the carrying amount for the end of the first year:New carrying amount = Old carrying amount + Amortized discount= $7,648,000 + $44,800 = $7,692,800Repeat these steps for the second year:1. Interest expense for the second year = $7,692,800 * 10% = $769,2802. Cash paid remains the same = $720,0003. Amortized discount in the second year = $769,280 - $720,000 = $49,2804. New carrying amount = $7,692,800 + $49,280 = $7,742,080Total discount amortized in two years = $44,800 + $49,280 = $94,080Unamortized bond discount at June 30, 2015 = Original discount - Total discount amortized= $352,000 - $94,080 = $257,920