On January 1, 2017, Walker Sales issued $19,000 in bonds for $14,300. These are eight-year bonds with a stated rate of 13%,

Question

3 years ago

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On January 1, 2017, Walker Sales issued $19,000 in bonds for $14,300. These are eight-year bonds with a stated rate of 13%,

and pay semiannual interest. Walker Sales uses the straight-line method to amortize the bond discount. After the second interest payment on December 31, 2017, what is the bond carrying amount? (Round your intermediate answers to the nearest cent, and your final answer to the nearest dollar.)

Business

1 answer:

AysviL [449] · Answer 1 · 2022-03-16T12:15:05+03:00

Answer:

$14,887.5

Explanation:

Carrying Value of the bond is the net of Face value and any amortised discount on the bond.

Face Value of the bond = $19,000

Issuance Value = $14,300

Discount Value = $19,000 - $14,300 = $4,700

This Discount will be amortized over the bond's life until the maturity on straight line basis.

Amortization in each period = $4,700 / (8x2) = $293.75 semiannually

Until December 31, 2017 two payment have been made and $587.5 is amortized in the two semiannual periods.

Un-amortized Discount = $4,700 - $587.5 = $4,112.5

Carrying value of the bond = Face value - Un-amortized Discount = $19,000 - $4,112.5 = $14,887.5

On January​ 1, 2017, Walker Sales issued​ $19,000 in bonds for​ $14,300. These are​ eight-year bonds with a stated rate of​ 13%,

On January 1, 2017, Walker Sales issued $19,000 in bonds for $14,300. These are eight-year bonds with a stated rate of 13%,