Question: Problem 9-40 AppendixComparing Amortization Methods On January 1, 2012, LED issues bonds with a face value of $300,000. These bonds have a stated interest rate

Problem 9-40 AppendixComparing Amortization Methods

On January 1, 2012, LED issues bonds with a face value of $300,000. These bonds have a stated interest rate of 4% and interest is paid annually on December 31. The bonds mature in four years. The market interest rate at the date the bonds are issued is 5%.

Required:

a. Determine the amount of discount on the bonds at issuance. Round to the nearest dollar. $

b. How much of the discount will be amortized in the first year under (1) the straight-line method and (2) the effective interest method? Round your answers to the nearest dollar.

Straight-line method	$
Effective interest method	$

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