Parrish Industries has bonds outstanding (originally sold for $4,400,000)in the amount of $5,000,000 with a current bond discount of $100,000.The bonds were selling at 104 on the market at its year end.At what value should it report these bonds on its balance sheet at year end?

Question

Quizplus · Accepted Answer

The bonds were originally sold for $4,400,000 and have a current bond discount of $100,000. Therefore, the carrying amount of the bonds is $4,300,000 (original amount - discount). At a market value of 104%, the bonds would be worth $5,200,000. However, the company should only report the carrying amount on its balance sheet, which is $4,300,000. Therefore, the best choice is C) $4,900,000, which is the closest option to the carrying amount.

Parrish Industries Has Bonds Outstanding (Originally Sold for $4,400,000)in the Amount