Gordon Corporation issued $200,000 par value, 4%, 5 year bonds on January 1, 2019. The bonds mature on December 31, 2023 and pay semi-annual interest. The market rate on the date of issue is 6%. Assuming that Gordon uses the straight-line method, what amount of discount amortization is recorded on June 30, 2019? a. $2,944,000 b. $1,706,000 c. $1,306,000 d. $1,796.50 b is the correct answer, but how is that calculated?

Gordon Corporation issued $200,000 par value, 4%, 5 year bonds on January 1, 2019. The bonds mature on December 31, 2023 and pay semi-annual interest. The market rate on the date of issue is 6%. Assuming that Gordon uses the straight-line method, what amount of discount amortization is recorded on June 30, 2019? a. $2,944,000 b. $1,706,000 c. $1,306,000 d. $1,796.50 b is the correct answer, but how is that calculated?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 99PSA

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