229. Dart Company issued $600,000 of 8%, 5-year bonds at 105, with interest paid annually. Assuming straight-line amortization, what is the carrying value of the bonds after one year?

Question

Quizplus · Accepted Answer

The premium on the bonds is $30,000 (105-100)*$600,000. The premium amortization is $6,000 ($30,000/5 years). Therefore, the carrying value of the bonds after one year is $624,000 ($600,000 + $6,000 premium amortization - $18,000 interest expense).