On December 31, 2013, a company issues bonds with a par value of $600,000. The bonds mature in 10 years, and pay 6% annual interest, payable each June 30 and December 31. The bonds sold at $592,000. The company uses the straight-line method of amortizing bond discounts. The company's year-end is December 31. What is the balance in the Discount on Bonds Payable account on 12/31/2014?

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To find the balance in the Discount on Bonds Payable account on December 31, 2014, we need to calculate the amortization of bond discount for the first year and subtract it from the initial discount.

First, let's calculate the total amount of bond discount. The bonds were sold at $592,000, which is lower than the par value of $600,000. Therefore, the bond discount is equal to the par value minus the selling price, which is $600,000 - $592,000 = $8,000.

Next, we need to determine the annual amortization of bond discount using the straight-line method. The bond discount will be amortized evenly over the life of the bond, which is 10 years. Therefore, the annual amortization of bond discount is $8,000 divided by 10, which is $800.

Since the bonds pay interest each June 30 and December 31, we need to determine the amount of bond discount amortization for the first year. In this case, the first June 30 and December 31 are within the same year, so we can proceed with the calculation.

The bond discount amortization for the first year would be $800 multiplied by the number of interest payment periods, which is 2 (as there are two interest payments in a year). Therefore, the bond discount amortization for the first year is $800 * 2 = $1,600.

Now, we can calculate the balance in the Discount on Bonds Payable account on December 31, 2014. We subtract the bond discount amortization for the first year ($1,600) from the initial discount ($8,000) to get the balance.

Thus, the balance in the Discount on Bonds Payable account on 12/31/2014 is $8,000 - $1,600 = $6,400.