On January 1, 2017Always Corporation issues $2,900,000, 5 year, 8% bonds for $2,820,000. Interest is paid...

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On January 1, 2017Always Corporation issues $2,900,000, 5 year, 8% bonds for $2,820,000. Interest is paid semiannually on Jan

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Answer 1

Answer #1

Answer is $8,000

Face Value = $2,900,000
Issue Value = $2,820,000

Discount on Bonds = Face Value - Issue Value
Discount on Bonds = $2,900,000 - $2,820,000
Discount on Bonds = $80,000

Time to Maturity = 5 years
Semiannual Period = 10

Semiannual Amortization of Discount = Discount on Bonds / Semiannual Period
Semiannual Amortization of Discount = $80,000 / 10
Semiannual Amortization of Discount = $8,000

So, amount of discount amortized on July 1, 2017 is $8,000

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Answer 2

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On January 1, 2017Always Corporation issues $2,900,000, 5 year, 8% bonds for $2,820,000. Interest is paid...