Question

McSteamyCompany issued bonds $293,000 of 5 year, 9 percent bonds on January 1, 2018, at 96....

McSteamyCompany issued bonds $293,000 of 5 year, 9 percent bonds on January 1, 2018, at 96. interest is payable in cash annually on December 31. The straight-line method is used for amortization.

What is the carrying value of the bond on December 31, 2018?
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Answer #1
carrying value of the bond on December 31, 2018    283,624.00
Explanation
Face Value of Bonds    293,000.00
Money received on issue = 293,000*96%    281,280.00
Discount on issue of Bonds = 293,000 - 281,280      11,720.00
Time period in years                 5.00
Discount written off every years = 11,720/5        2,344.00
Carrying value of bonds = 281,280 + 2,344    283,624.00
Balance in Discount on bonds payable = 11,720 - 2344        9,376.00
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