Homework Answers
Correct answer-------------(C) $536,646
Working
| Year end | Cash paid | Interest expense | Change in carrying value | Carrying value |
| March 31, 2018 | $ 537,680 | |||
| Sep 30, 2018 | $ 28,435 | $ 27,401 | $ (1,034) | $ 536,646 |
.
| Bond issue price (417000/100*104) | $ 537,680 |
| Face value | $ 517,000 |
| Premium on bonds payable | $ 20,680 |
| Number of Interest payments (10 years x 2) | 20 |
| Discount/ premium to be amortized per Half year | $ 1,034 |
| Cash Interest on bond (517000 x 5.5%) | $ 28,435 |
| Interest expense to be recorded (28435-1034) | $ 27,401 |
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