Assuming that Auerbach issued the bonds for $255,369,000, what would the company report for its net bond liability balance after its first interest payment on March 31, 2010, rounded up to the nearest thousand?
A)$252,369,000
B)$256,369,000
C)$256,300,000
D)$257,030,000.This is the beginning liability of $255,369,000 + interest accrued for six months (3% of issue price) cash paid of $6,000,000.

Question

Quizplus · Accepted Answer

The net bond liability balance after the first interest payment can be calculated as follows:
Beginning liability = $255,369,000
Interest accrued for six months (3% of issue price) = $7,661,070
Cash paid for interest = $6,000,000
Net bond liability balance = Beginning liability + interest accrued - cash paid
= $255,369,000 + $7,661,070 - $6,000,000
= $257,030,070
Rounding up to the nearest thousand gives a net bond liability balance of $257,030,000, which is option D.

Assuming That Auerbach Issued the Bonds for $255,369,000, What Would