ADAPTED

On January $1,20$X$1,$ when the market interest rate was $14\%,$ Luba Corporation issued $10-$year bonds in the face amount of $$500,000$ with interest at $12\%$ payable semiannually. The bonds mature on December $31,20$X$9.$

Required:

Calculate the bond discount at issuance. How much of the discount should be amortized by the effective interest method on July $1,20$X$1?$