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Homework answers / question archive / On January 1, 2018, Westside Sales issued $21,000 in bonds for $24,800
On January 1, 2018, Westside Sales issued $21,000 in bonds for $24,800. These are eight-year bonds with a stated interest rate of 9% that pay semiannual interest. Westside Sales uses the straight-line method to amortize the bond premium. After the first interest payment on June 30, 2018, what is the bond carrying amount? (Round your intermediate answers to the nearest dollar.) A. $21,000 B. $24,800 C. $21,238 D. $24,562 Click to select your answer.
Solution:
Premiun amirtization on June 30, 2018 = (24800 - 21000)/ 16 = $238
Therefore, carrying amount of bond after first payment = issue price - premium amortization on June 30, 2018
= 24800 - $238
= $24,562
Hence option "D" is correct.
