Interest has accrued at 8% on the long-term notes payable since July 1, 2010. Th

Question

Interest has accrued at 8% on the long-term notes payable since July 1, 2010. The next six-month interest payment at 9% on the bonds is due on March 1, 2011. The discount on bonds payable has not been amortized for any part of 2010; the bonds are dated March 1, 2004, and mature March 1, 2014. (Use straight-line).

I'm doing adjusting entry for the year end December 31, 2010.

Account Balances:

Notes Payable Acct. (LT Liability)
1/1 Balance 43,000
7/1 Increased Mortgage (credit 70,000) balance 113,000

Bonds Payable
1/1 (issued 3/1/04) 275000 (maturity 3/1/14)

Discount on bonds payable
1/1 4400


I am pretty sure I understand how to get the interest for the first part of the question, but I am stuck on the amortization of the discount. So far I have:

Interest Expense 4090
Interest Payable 4090

For the discount amortization would I just divide the remaining balance of discount on bonds payable by the remaining payments, or am I forgetting some steps. It does not seem like it should be that simple for some reason.

Explanation / Answer

Interest Expense(dr) 1536

Discount on bond payable(cr) 1536

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