(Please show work) Mcknight Corporation issued $2,100,000, 15-year, 7% bonds for $2,037,000 on January 1, 2019....
(Please show work)
Mcknight Corporation issued $2,100,000, 15-year, 7% bonds for $2,037,000 on January 1, 2019. Interest is paid semiannually on January 1 and July 1. The corporation uses the straight-line method of amortization. Mcknight's fiscal year ends on December 31. The amount of discount amortization on July 1, 2019, would be?
$2,100
Homework Answers
Solution:
Total discount on bond payable = Face value of bonds - issue price of bonds
= $2,100,000 - $2,037,000 = $63,000
Maturity period = 15 years = 30 half years
Discount amortization on each semi annual period = total discount/30
= $63,000/ 30
= $2,100
Hence discount amortization on July 1, 2019 = $2,100
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(Please show work)
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