On January 1, 2011, Lisbon Corp. issued 2,000 of its 9 percent, $1,000 bonds at 95. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2021. Lisbon paid bond issue costs of $80,000, which are appropriately recorded as a deferred charge. Lisbon uses the straight-line method of amortizing bond discount and bond issue costs. On Lisbon's December 31, 2011, balance sheet, how much would be shown as the carrying amount of the bonds payable?

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The bonds were issued at 95, meaning they were issued at 95% of their face value, which is $1,900,000 (2,000 bonds x $1,000 x 95%). The bond discount is $100,000 ($2,000,000 - $1,900,000). The bond issue costs are $80,000. Both the discount and issue costs are amortized over 10 years. By December 31, 2011, one year of amortization has occurred. The annual amortization for the discount is $10,000 ($100,000/10) and for the issue costs is $8,000 ($80,000/10). Therefore, the carrying amount is $1,900,000 + $10,000 + $8,000 = $1,910,000.