On November 1, 2013, Davis Company issued $30,000, ten-year, 7% bonds for $29,100. The bonds were dated November 1, 2013, and interest is payable each November 1 and May 1. How much is the amount of straight-line discount amortization on each semi-annual interest date?
A) $90.
B) $45.
C)$900.
D)$450.

Question

Quizplus · Accepted Answer

The amount of discount is $900 ($30,000 - $29,100). 
The bonds have a 10-year term, so there are 20 semi-annual periods (10 years x 2 semi-annual periods per year). 
Therefore, the straight-line discount amortization on each semi-annual interest date is $45 ($900 / 20).

On November 1, 2013, Davis Company Issued $30,000, Ten-Year, 7