On January 2, 2014, Mahoney Sales issued $10,000 in bonds for $9,400

Accounting Mar 19, 2021

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

Expert Solution

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.

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