Carla Vista Co. issued $1090000 of 8%, 5-year bonds at 107, which pay interest annually. Assuming...

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Carla Vista Co. issued $1090000 of 8%, 5-year bonds at 107, which pay interest annually. Assuming straight-line amortization,

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Answer 1

Answer #1

Answer is 1151040 Explanation: $ 1090000x 107 ÷100 = $ 1166,300 Here premium is $ 76 ,300 76,300 / 5 = $ 15,260 76300- 15 260 =$ 61,040 Finally the bond carrying value after one year is ($ 109,000+$ 61,40 ) = $ 1151040

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answered by: NAROJU NARENDAR

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Answer 2

Answer #2

Issue price = 107

Cash receipts from issue of bonds = 1,090,000 x 107%

= $1,166,300

Par value of bonds = $1,090,000

Premium on bonds payable = Cash receipts from issue of bonds - Par value of bonds

= 1,166,300 - 1,090,000

= $76,300

Annual Amortization of bond premium = Premium on bonds payable/Bond life

= 76,300/5

= $15,260

Caarying value of bonds after 1 year = Caarying value of bonds at the time of issue - Annual Amortization of bond premium

= 1,166,300 - 15,260

= $1151040

Fourth option is correct.

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Answer 3

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