On March 1,20x5,King Corp.sold 102 of its 9 percent,$1,000 bonds for a price of 102 plus accrued interest.The accrued interest amounted to $800.If a balance sheet were to be prepared at the end of the day,March 1,20x5,the carrying value reported for the bonds payable would be

Question

Quizplus · Accepted Answer

The carrying value of the bonds payable is calculated by taking the face value of the bonds and adding any premium or subtracting any discount. In this case, the bonds were sold at a price of 102, which means they were sold at a 2% premium. The face value of 102 bonds at $1,000 each is $102,000. The premium is 2% of $102,000, which is $2,040. Therefore, the carrying value of the bonds payable is $102,000 + $2,040 = $104,040. The accrued interest of $800 does not affect the carrying value of the bonds payable; it is recognized as interest expense and interest payable.