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A company issues $25,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2019. Interest is...

A company issues $25,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2019. Interest is paid on June 30 and December 31. The proceeds from the bonds are $24,505,180. Using straight-line amortization, what is the carrying value of the bonds on December 31, 2021?

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Answer #1
Par value of bonds 2,50,00,000
Issue price of bonds 2,45,05,180
Total Discount 4,94,820
Divide: Total number of periods 40
Discount amortized each period 12370.5
Multiply: Periods expired till 31.12.21 6
Discount amortized till 31.12.21 74223
Discount Unamortized as at 31.12.21 4,20,597
(494820-74223)
Carrying Value of bonds:
Par value of bonds payable 2,50,00,000
Less: Unamortized discount 4,20,597
Net Bonds payable 2,45,79,403
Answer is $ 24579,403
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