On March 1,20x5,Darby Corporation sold 102 of its 9 percent,$1,000 bonds for a price of 96 plus accrued interest.The accrued interest amounted to $1,000.If a balance sheet were to be prepared at the end of the day,March 1,20x5,the carrying value reported for the bonds payable would be

Question

Quizplus · Accepted Answer

The carrying value of the bonds payable is calculated by taking the face value of the bonds and adjusting for any premium or discount. In this case, the bonds were sold at a discount (96% of face value). The face value of the bonds is 102 bonds * $1,000 = $102,000. Sold at 96% of face value, the amount received is $102,000 * 96% = $97,920. The accrued interest does not affect the carrying value of the bonds payable; it is an additional amount paid to the bondholders for the interest that has accrued up to the sale date. Therefore, the correct carrying value of the bonds payable on the balance sheet would be $97,920.

On March 1,20x5,Darby Corporation Sold 102 of Its 9 Percent,$1,000