On January 2 2017 100000 of 12 10year bonds were issued for

On January 2, 2017, $100,000 of 12%, 10-year bonds were issued for $97,400. The $2,600 discount was charged to Interest Expense. The bookkeeper, Mark Landis, records interest only on the interest payment dates of January 1 and July 1.

(a1)

Account Titles and Explanation

Debit

Credit

On January 2, 2017, $100,000 of 12%, 10-year bonds were issued for $97,400. The $2,600 discount was charged to Interest Expense. The bookkeeper, Mark Landis, records interest only on the interest payment dates of January 1 and July 1.

Solution

Answer

discount charged to interest expense = 2600

discount to be charged to interest expense = 2600 / 10

= 260

excess amortization = 2600 - 260

= 2340