On 1 January 2017,Carter Sales issued $17,000 in debentures for $20,800.They were eight year debentures with a stated rate of 12% and pay semiannual interest.Carter Sales uses the straight-line method to amortise the debenture premium.After the first interest payment on 30 June 2017,what was the debenture carrying amount? (Round to the nearest dollar. )
A)$17,000
B)$17,238
C)$20,562
D)$20,800

Question

Quizplus · Accepted Answer

The premium on the debentures is $3,800 ($20,800 - $17,000). Over 8 years, with semiannual payments, there are 16 periods. The premium amortization per period is $237.50 ($3,800 / 16). After the first payment, the carrying amount is $20,800 - $237.50 = $20,562.50, rounded to $20,562.

On 1 January 2017,Carter Sales Issued $17,000 in Debentures for $20,800.They