**Problem Statement:**On January 1, $853,000, 5-year, 10% bonds were issued for $827,410. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize a discount on bonds payable, the semiannual amortization amount is:- a. $42,650- b. $2,559- c. $25,590- d. $5,118**Explanation:**This question asks for the semiannual amortization amount of a bond discount using the straight-line method. 1. **Bond Details:** - Face Value: $853,000 - Issued Price: $827,410 - Discount: $853,000 - $827,410 = $25,5902. **Amortization Period:** - Duration: 5 years - Payments: Semiannually (2 times a year) - Total Payments: 5 years * 2 = 10 periods3. **Straight-Line Amortization Calculation:** - Total Discount: $25,590 - Each Period's Amortization: $25,590 / 10 = $2,559Thus, the correct answer is **b. $2,559**. This explanation breaks down the problem and solution for educational purposes, assisting learners in understanding the process of bond discount amortization using the straight-line method.

The bonds are issued at discount when market rate is higher than the coupon rate of bonds payable.…

On January 1, $853,000, 5-year, 10% bonds were issued for $827,410. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize a discount on bonds payable, the semiannual amortization amount is Oa. $42,650 Ob. $2,559 Oc. $25,590 Od. $5,118

On January 1, $853,000, 5-year, 10% bonds were issued for $827,410. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize a discount on bonds payable, the semiannual amortization amount is Oa. $42,650 Ob. $2,559 Oc. $25,590 Od. $5,118

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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