Answer:
A. $3,903,000.
Explanation:
The computation of the carrying value of the bond is shown below:
But before that first we have to do following calculations
The value of the bonds is
= $3960,000 - $60,000
= $39,00,000
Since it is a accrued interest and the same is to be deducted
Now the bond sold at discount so the amount would be
= $4,000,000 -$ 3,900,000
= $100,000
And, the period of the bonds is October 1, 2018 to February 1, 2027 i.e 100 months
= 3 months in 2018 + 96 months + 1 months in 2027
The 96 months represents the 8 years
And, discount amortized from October 1, 2018 to December 31 , 2018 is
= $100,000 × 3 ÷ 100
= $3,000
The 3 represents the 3 months and 100 represent the total months
So, the carrying value of the bonds is
= $3,900,000 + $3,000
= $3,903,000
