On January 1 Wellness Corporation issues $3000000 5-year 12% bonds at 95 with interest payable on January 1. The entry on December 31 to record accrued bond interest and the amortization of bond discount using the straight-line method will include a

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The bond discount is $150,000 ($3,000,000 x 5%). Over 5 years, the annual amortization is $30,000 ($150,000 / 5). Therefore, the entry will include a credit to Discount on Bonds Payable for $30,000.

On January 1 Wellness Corporation Issues $3000000 5-Year 12% Bonds