Answer:
Book Value of bond = $106,931
Explanation:
Given:
Face value of bond = $100,000
Issue price = $108,425
Computation:
Interest payment = $100,000 x 8%
Interest payment = $8,000
Interest expense = $108,425 x 6%
Interest expense = $6,505.50
Amortization of premium = $8,000 - $6,505.50
Amortization of premium = $1,494.50
Book Value of bond = $108,425 - $1,494.50
Book Value of bond = $106,931