On January 1,2015,Carter Sales issued $15,000 in bonds for $14,700.They were 6-year bonds with a stated rate of 9%,and pay semiannual interest.Carter Sales uses the straight-line method to amortize the Bond Discount.Immediately after the issue of the bonds,the ledger balances appeared as follows:
-After the second interest payment on December 31,2015,what will be the balance in the Discount account?

Question

On January 1,2015,Carter Sales issued $15,000 in bonds for $14,700.They were 6-year bonds with a stated rate of 9%,and pay semiannual interest.Carter Sales uses the straight-line method to amortize the Bond Discount.Immediately after the issue of the bonds,the ledger balances appeared as follows:  
-After the second interest payment on December 31,2015,what will be the balance in the Discount account?

Quizplus · Accepted Answer

The balance in the Discount account after the second interest payment would be a debit of $250. This is calculated by considering the amortization of the discount over the period, assuming the initial discount was $500 and it is being amortized evenly over two periods.

On January 1,2015,Carter Sales Issued $15,000 in Bonds for $14,700