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
Correct Answer:
Verified
Correct Answer:
Verified
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