On January 1, 2014, Bentley Company issued £25,000,000, 5-year, 7% bonds, were issued for £24,625,000. Interest is paid annually on December 31. Bentley uses the straight-line method to amortize discount on bonds payable The annual amortization of bond discount is

Question

Quizplus · Accepted Answer

Discount on bonds payable = £25,000,000 - £24,625,000 = £375,000
Annual amortization of bond discount = £375,000 ÷ 5 years = £75,000. Therefore, the correct answer is B.

On January 1, 2014, Bentley Company Issued £25,000,000, 5-Year, 7