On January 1, 2014, $4,000,000, 5-year, 10% bonds, were issued for $3,880,000. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable, the monthly amortization amount is

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The total discount on the bonds is $4,000,000 - $3,880,000 = $120,000. The bonds are for 5 years, with interest paid semiannually, resulting in 10 periods. The semiannual amortization is $120,000 / 10 = $12,000. The monthly amortization is $12,000 / 6 = $2,000.

On January 1, 2014, $4,000,000, 5-Year, 10% Bonds, Were Issued