Problem:
On January 1, 2014, when the market interest rate was 14%, Luba Corporation issued bonds in the face amount of $500,000 with interest at 12% payable semiannually. The bonds mature on December 31, 2023.
Required:
Calculate the bond discount at issuance. How much of the discount should be amortized by the effective interest method on July 1, 2014?