On January 1, 2010, $3,000,000, 5-year, 10% bonds, were issued for $2,910,000. 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
A) $17,424.
B) $18,000.
C) $1,452.
D) $1,500.

Question

Quizplus · Accepted Answer

The total discount on the bonds is $90,000 ($3,000,000 - $2,910,000). Over 5 years, or 60 months, the monthly amortization is $1,500 ($90,000 / 60).

On January 1, 2010, $3,000,000, 5-Year, 10% Bonds, Were Issued