On July 1, 2014, Pike Inc.issued $500,000, 9% bonds, which mature on July 1, 2024.The bonds were issued for $469,500 to yield 10%.Pike uses the effective interest method of amortizing bond discount.Interest is payable annually on June 30.At June 30, 2016, the adjusted balance in the Bonds Payable account should be

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The adjusted balance in the Bonds Payable account is calculated by adding the amortized discount to the initial carrying amount. The initial carrying amount is $469,500. For two years, the interest expense is calculated using the effective interest rate (10%), and the cash interest is calculated using the coupon rate (9%). The difference is the amortized discount. After two years, the adjusted balance is $473,595.