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Homework answers / question archive / The Technology Company issues $506,000 of 8?%, 10−year bonds at 106 on March? 31, 2018
The Technology Company issues $506,000 of 8?%, 10−year bonds at 106 on March? 31, 2018. The bonds pay interest on March 31 and September 30. Assume that the company uses the straight−line method for amortization. Calculate the net balance that will be reported for the bonds on the September? 30, 2018 balance sheet.? (Round your intermediate answers to the nearest? dollar.)
A.
$534,842
B.
$536,360
C.
$537,878
D.
Computation of Net Balance that will be reported for the bonds on the September? 30, 2018 Balance Sheet:
Given,
Face Value of Bonds = $506,000
Bond Issue Price = $506,000/100*106 = $536,360
Premium on Bonds Payable = $536,360-$506,000 = $30,360
Number of Payments = 10*2 = 20
Semiannual amortization of Bonds Payable = $30,360 / 20 = $1,518
carrying value on bonds Payable = $536,360 - $1,518 = $534,842
So, the correct option is A "$536,842". Net Balance that will be reported for the bonds on the September? 30, 2018 Balance Sheet is $534,842.
