Discount Amortization On the first day of the fiscal year, a company issues a $3,000,000, 11%,...

Discount Amortization

On the first day of the fiscal year, a company issues a $3,000,000, 11%, five-year bond that pays semiannual interest of $165,000 ($3,000,000 × 11% × ½), receiving cash of $2,889,599.

Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

	Interest Expense
	Discount on Bonds Payable
	Cash

Expert Solution

Particulars	Debit ($)	Credit ($)
Interest Expense	$1,76,040
Discount on Bonds Payable		$11,040
Cash		$1,65,000

**Amortisation of Doscount in each year = ($30,00,000-$28,89,599) / 10 Years

= $1,10,401 / 10

= $11,040

ekkarill92 answered 2 years ago

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