On January 2,2014,Mahoney Sales issued $10,000 in bonds for $10,900.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 premium.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 premium account?

Question

On January 2,2014,Mahoney Sales issued $10,000 in bonds for $10,900.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 premium.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 premium account?

Quizplus · Accepted Answer

D) Calculations: $900 - ($900/5 × 6/12) = $810

On January 2,2014,Mahoney Sales Issued $10,000 in Bonds for $10,900