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On January 1, Martinez Corp. issues $2640000, 5-year, 12% bonds at 98 with interest payable on...

On January 1, Martinez Corp. issues $2640000, 5-year, 12% bonds at 98 with interest payable on January 1. The entry on December 31 to record accrued bond interest and the amortization of bond discount using the straight-line method will include a

debit to Interest Expense, $158400.

credit to Discount on Bonds Payable, $10560.

credit to Discount on Bonds Payable, $5280.

debit to Interest Expense, $316800.
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Correct Answer is:

credit to Discount on Bonds Payable, $10560.

Face Value $2,640,000
Issue Price $2,640,000*0.98 $2,587,200
Discount a $     52,800
Terms b 5 Years
Annual Amortization a/b $     10,560
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