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dow Help Connect https t mheducation.com gested Sites Web Slice Gallery Chapter 10 Quiz Help Save& Exit Submit MC Qu. 118 On January 1, a company issued... On January 1, a company issued and sold a $440.000, 6%, 10-year bond payable, and received proceeds of $434,000 Interest is payable each June 30 and December 31 The company uses the straight-line method to amortize the discount The carrying value of the bonds immediately after the first interest payment is Multiple Choice 439700 $440000 5 8 W E

Explanation / Answer

Par value of the bond issued is   = $4,40,000 Issue price = $4,34,000 Discount on the issue of the bond = $6,000.00 Life of the bonds = 10 years Period of the bonds = interest payable in half yearly = 10 Years X 2) 20 Periods So discount will be amortize in equal 20 installement = $ 6,000 / 20 = $300.00 Per installment CACLULATION OF THE CARRYING VALUE OF THE BONDS Issue Value of the Bonds $4,34,000 Add: Amortization value of the first payment $300.00 Carrying value of the bond $4,34,300.00 Answer = Option 4 = $ 434,300

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