On January 1, 2015, Carter Sales issued $15,000 in bonds for $15,800. 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 premium. After the first interest payment on June 30, 2015, what was the bond carrying amount?

Question

Quizplus · Accepted Answer

The bond premium of $800 ($15,800 - $15,000) is amortized over 16 periods (8 years x 2). Each period, $50 ($800/16) is amortized. After the first payment, the carrying amount is $15,800 - $50 = $15,750.

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