ABC Company issued $100,000 face value of bonds on January 1, 2014. The bonds had a 5 percent stated rate of interest and a 10-year term. Interest is paid in cash annually, beginning December 31, 2014. The bonds were issued at 96. (Use straight-line amortization for the bond discount or premium.) Determine the carrying value of the bond liability as of December 31, 2014. a. $100,000. b. $96,400. c. $96,000. d. None of the above.

Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 4EA: On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated...
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ABC Company issued $100,000 face value of bonds on
January 1, 2014. The bonds had a 5 percent stated rate
of interest and a 10-year term. Interest is paid in cash
annually, beginning December 31, 2014. The bonds
were issued at 96. (Use straight-line amortization for
the bond discount or premium.)
Determine the carrying value of the bond liability as of
December 31, 2014.
a. $100,000.
b. $96,400.
c. $96,000.
d. None of the above.
Transcribed Image Text:ABC Company issued $100,000 face value of bonds on January 1, 2014. The bonds had a 5 percent stated rate of interest and a 10-year term. Interest is paid in cash annually, beginning December 31, 2014. The bonds were issued at 96. (Use straight-line amortization for the bond discount or premium.) Determine the carrying value of the bond liability as of December 31, 2014. a. $100,000. b. $96,400. c. $96,000. d. None of the above.
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