On January 2,2014,Mahoney Sales issued $10,000 in bonds for $9,400.They were 5-year bonds with a stated rate of 4%,and pay semiannual interest payments.Mahoney Sales uses the straight-line method to amortize the bond discount.Immediately after issue of the bonds,the ledger balances appeared as follows:
- After the first interest payment on June 30,2014,what was the balance in the discount account?

Question

On January 2,2014,Mahoney Sales issued $10,000 in bonds for $9,400.They were 5-year bonds with a stated rate of 4%,and pay semiannual interest payments.Mahoney Sales uses the straight-line method to amortize the bond discount.Immediately after issue of the bonds,the ledger balances appeared as follows: 
- After the first interest payment on June 30,2014,what was the balance in the discount account?

Quizplus · Accepted Answer

A) Calculations: $600 - (600/5 × 6/12) = $540

On January 2,2014,Mahoney Sales Issued $10,000 in Bonds for $9,400