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19 April, 22:45

Mcknight Corporation issued $ 2,100,000 , 15 -year, 4 % bonds for $ 2,016,000 on January 1, 2019. Interest is paid semiannually on January 1 and July 1. The corporation uses the straight-line method of amortization. Mcknight 's fiscal year ends on December 31. The amount of discount amortization on July 1, 2019 , would be?

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  1. 20 April, 02:26
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    discount on bond payable amortization for paymentof July 1st, 2019:

    2,800

    Explanation:

    face value 2,100,000

    issued at 2,016,000

    discount 84,000

    striaght-line amortization: disount / total payments

    total payment: 15 year at 2 payment per year = 30

    84,000/30 = 2,800 per payment

    cash proceeds 2,100,000 x 0.04/2 = 42,000

    interest expense 42,000 + 2,800 = 44,800

    July 1, 2019

    interst expense 44,800 debit

    discount on bond payable 2,800

    cash 42,000
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