On January 1, 2015, Carter Sales issued $15,000 in bonds for $14,300. They were 8-year bonds with a stated rate of 9%, and pay semiannual interest. Carter Sales uses the straight-line method to amortize the bond discount. After the second interest payment on December 31, 2015, what was the bond carrying amount?

Question

Quizplus · Accepted Answer

The bond discount is $700 ($15,000 - $14,300). Over 8 years, with semiannual payments, there are 16 periods. The discount amortization per period is $43.75 ($700/16). After two periods, the amortization is $87.50 ($43.75 * 2). The carrying amount is $14,300 + $87.50 = $14,387.50, rounded to $14,388.

On January 1, 2015, Carter Sales Issued $15,000 in Bonds