On January 2,2014,Mahoney Sales Issued $10,000 in Bonds for $9,400

question 161

Multiple Choice

On January 2,2014,Mahoney Sales issued $10,000 in bonds for $9,400.They were 5-year bonds with a stated rate of 4%,and pay semiannual interest payments.Mahoney Sales uses straight-line method to amortize bond discount.Immediately after issue of the bonds,the ledger balances appeared as follows:
- After the second interest payment on December 31,2014,what was the balance in the discount account?

• A) Debit of $540
• B) Debit of $720
• C) Debit of $480
• D) Credit of $660

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