Brownlee Company issued $525,000, 8%, six-year bonds for 110, with interest paid annually. Assuming straight-line amortization, what is the carrying
a. $573,125
b. $577,500
c. $586,250
d. $568,750
The carrying value of bonds after one year for Company B.
Answer to Problem 1QC
Option d. $568,750.
Explanation of Solution
The carrying value of bond:
Carrying value of bond is the difference amount of face value of bond by deducting the amortized discounts and un-amortized premiums.
Following is the calculation of carrying value of bond
Therefore, according to the above calculation Option d. 568,750 is the correct answer and the other options of a, b and c are incorrect options.
Working notes:
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