Question

A company issues $24950000, 5.8%, 20-year bonds to yield 6% on January 1, 2019. Interest is paid on June 30 and December 31. The proceeds from the bonds are $24373285. Using straight-line amortization, what is the carrying value of the bonds on December 31, 2021? (Round answer to 0 decimal place, e.g. 52.)

$24459792

$24468179

$24806169

$24425679

Answer 1

WORKING NOTES :
	Calculation of coupon amount and amortization of Discount per period
	Par Value of the bonds =	$          2,49,50,000
	Issue price of the bond	$          2,43,73,285
	Discount on issuance of bonds	$                5,76,715
	Coupon rate		6%
	Coupon amount =	$             14,97,000
	Half year coupon amount =	$                7,48,500
	Life of the Bonds =	20	Years
	Period of the bonds =	40	Period
	Discount on issue of Bonds	$                5,76,715
	Divide By		"/" By
	Period of The Bonds	40	Periods
	Discount amortization	$                   14,418	Per Periods
	SOLUTION:
		Date	Interest to be paid in Cash	Interest Expenses	Discount Amortization	Unamortized Premium	Bonds Carrying Value
		January 01. 2019				$          5,76,715	$2,43,73,285
		June.30 2019	$                7,48,500	$7,62,918	$14,418	$5,62,297	$2,43,87,703
		Dec. 31 2019	$                7,48,500	$7,62,918	$14,418	$5,47,879	$2,44,02,121
		June.30 2020	$                7,48,500	$7,62,918	$14,418	$5,33,461	$2,44,16,539
		Dec. 31 2020	$                7,48,500	$7,62,918	$14,418	$5,19,044	$2,44,30,957
		June.30 2021	$                7,48,500	$7,62,918	$14,418	$5,04,626	$2,44,45,374
		Dec. 31 2021	$                7,48,500	$7,62,918	$14,418	$4,90,208	$2,44,59,792
	Answer = Carrying Value of Bonds = Option 1= $ 24,459,792