Discount-Mart issues $10 million in bonds on January 1, 2021. The bonds have a ten-year term...

Discount-Mart issues $10 million in bonds on January 1, 2021. The bonds have a ten-year term and pay interest semiannually on June 30 and December 31 each year. Below is a partial bond amortization schedule for the bonds:

Date	Cash Paid		Interest Expense		Increase in Carrying Value		Carrying Value
01/01/2021							$	8,640,967
06/30/2021	$	300,000	$	345,639	$	45,639		8,686,606
12/31/2021		300,000		347,464		47,464		8,734,070
06/30/2022		300,000		349,363		49,363		8,783,433
12/31/2022		300,000		351,337		51,337		8,834,770

What is the carrying value of the bonds as of December 31, 2022?

Solutions

Expert Solution

Answer: Carrying value of the bonds as of December 31, 2022 = $8,834,770

Carrying value at any point of time [for bonds issued on discount] = Face value of bonds payable-Unamortized discount on bonds payable.

For bonds issued at permium, Carrying value at any point of time = Face value of bonds payable+Unamortized premium on bonds payable.

jeff jeffy answered 2 years ago

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