On 2 January 2014, Mahoney Sales issued $10 000 in debentures for $9 400. They were 5- year debentures with a stated rate of 4%, and pay half- yearly interest payments. Mahoney Sales uses the straight- line method to amortise the debenture discount. After the second interest payment on 31 December 2014, what was the debenture carrying amount?

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The debenture discount is $600 ($10,000 - $9,400). Over 5 years, the annual amortization is $120 ($600/5). After one year, $240 ($120 x 2) is amortized, making the carrying amount $9,640 ($9,400 + $240).

On 2 January 2014, Mahoney Sales Issued $10 000 in Debentures