Question

The Cinci Company issues $100,000, 10% bonds at 103 on April 1, 2020. The bonds are...

  1. The Cinci Company issues $100,000, 10% bonds at 103 on April 1, 2020. The bonds are dated January 1, 2020 and mature six years from that date. Straight-line amortization is used. Interest is paid annually each December 31. Compute the bond carrying value as of December 31, 2023.

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$_______________

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Answer #1
Calculation for Carrying Value on 31-Dec-2023
Value as on 1 April 2020 $1,03,000.00
Add Interest for the year $7,500.00
Less Interest received on 31-Dec $7,500.00
Less Amortized $500.00
Value as on 1 January 2021 $1,02,500.00
Add Interest for the year $10,000.00
Less Interest received on 31-Dec $10,000.00
Less Amortized $500.00
Value as on 1 January 2022 $1,02,000.00
Add Interest for the year $10,000.00
Less Interest received on 31-Dec $10,000.00
Less Amortized $500.00
Value as on 1 January 2023 $1,01,500.00
Add Interest for the year $10,000.00
Less Interest received on 31-Dec $10,000.00
Less Amortized $500.00
Value as on 31 December 2023 $1,01,000.00

*Amount of Amortization = ($103000 - $100000) / 6 = $500

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