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Homework answers / question archive / On January 2, 2014, Mahoney Sales issued $10,000 in bonds for $9,400
On January 2, 2014, Mahoney Sales issued $10,000 in bonds for $9,400. They were 5-year bonds with a stated rate of 4% and pay annual interest payments. Mahoney Sales uses the straight-line method to amortize the bond discount. After the second interest payment on January 2, 2016, what was the bond carrying value?
a. $9,640
b. $9,400
c. $9,760
d. $10,360
Answer:
a .
Step-by-Step explanation
carrying amount = bond payable - amount to be amortized amount
= $ 10,000 - (600×3/5)
= $ 10,000 - 360
= $ 9640
Therefore, the correct option is A.
