On January 1, We Grow Awesome Grass issued and sold a $350,000, 6%, 10-year bond payable,...
On January 1, We Grow Awesome Grass issued and sold a $350,000, 6%, 10-year bond payable, and received proceeds of $375,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the premium. The carrying value of the bonds immediately after the first interest payment is:
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$376,250. |
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$351,250. |
||
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$348,750. |
||
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$373,750. |
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$350,000. |
Homework Answers
Premium on bonds payable = 375000-350000 = 25000
Semiannual amortization = 25000/20 = 1250
Carrying value = 375000-1250 = 373750
So answer is d) $373750
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