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In: Accounting
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:
Solutions
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 agoRelated Solutions
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