To the nearest dollar, what is the carrying amount of the bonds after the first interest payment?
A)$395,600
B)$ 387,658
C)$ 393,400
D)$ 425,000

Question

Quizplus · Accepted Answer

Using the straight-line method, the first interest payment would be $19,700 ($1,970,000 × 10% ÷ 2). The carrying value at the beginning of the period would be $396,100 ($400,000 + ($1,970,000 - $400,000) × 5%).
The carrying amount after the first interest payment would be $393,400 ($396,100 - $2,700). Therefore, the correct answer is C.

To the Nearest Dollar, What Is the Carrying Amount of the Bonds