On January 2, 2017, $100,000 of 12%, 10-year bonds were issued for $97,400. The

Question

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.

Explanation / Answer

Answer

discount charged to interest expense = 2600

discount to be charged to interest expense = 2600 / 10

= 260

excess amortization = 2600 - 260

= 2340

particulars debit credit discount on bonds 2340 TO interest expense 2340 ( being excess discount amortized reversed )

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