Winrow Company received proceeds of $754,000 on 10-year, 8% bonds issued on January 1, 2019.The bonds had a face value of $800,000, pay interest annually on December 31, and have a call price of 101.Winrow uses the straight-line method of amortization.What is the carrying value of the bonds on January 1, 2021?
A)$800,000
B)$763,200
C)$790,800
D)$758,600

Question

Quizplus · Accepted Answer

The carrying value of the bonds on January 1, 2021, is $763,200. This is calculated by taking the face value of the bonds ($800,000) and subtracting the unamortized discount ($36,800). The unamortized discount is calculated by multiplying the discount ($46,000) by the fraction of the bond's life that has expired (2/10).

Winrow Company Received Proceeds of $754,000 on 10-Year, 8% Bonds