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Wayne Company issued bonds with a face value of $780,000, a 12% stated rate of interest,...

Wayne Company issued bonds with a face value of $780,000, a 12% stated rate of interest, and a 10-year term. The bonds were issued on January 1, Year 1, and Wayne uses the straight-line method of amortization. Interest is paid annually on December 31. Assuming Wayne issued the bonds for 105, the carrying value of the bonds on the December 31, Year 1 balance sheet would be:

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Expert Solution

Answer: $ 815,100

Face value of the Bond = 780,000

Issue Price = 780,000*1.05 = $ 819,000

Premium on Bonds Payable = 819,000-780,000 = 39,000

Semi-annual Bond Amortization = 39,000/(10 Years ) = 3,900

Bond- Carrying Value on December 31, YEar 1 = 819,000-3900 = $815,100 (Answer)

ekkarill92 answered 2 years ago
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