On January 1 Concord Corporation issued 5700000 9 bonds for

On January 1, Concord Corporation issued $5700000, 9% bonds for $5395000. The market rate of interest for these bonds is 10%. Interest is payable annually on December 31. Concord uses the effective-interest method of amortizing bond discount. At the end of the first year,

Concord should report unamortized bond discount of

$278500.

$251050.

$248000.

$267500

Solution

Calculate At the end of the first year,Concord should report unamortized bond discount of :

Total discount = 5700000-5395000 = 305000

Amortized discount = (5700000*9%)-(5395000*10%) = 26500

Unamortized bond discount = (305000-26500) = 278500

so answer is a) $278500