Discount-Mart issues $16 million in bonds on January 1, 2012. They have a nine-y
ID: 2471216 • Letter: D
Question
Discount-Mart issues $16 million in bonds on January 1, 2012. They have a nine-year term and pay interest semiannually. This is the partial bond amortization schedule for the bonds.
What is the carrying value of the bonds as of December 31, 2013? (Round your answer to the nearest dollar amount.)
$14,339,254.
$14,265,956.
$14,416,217.
$15,696,217.
Discount-Mart issues $16 million in bonds on January 1, 2012. They have a nine-year term and pay interest semiannually. This is the partial bond amortization schedule for the bonds.
Explanation / Answer
Date
Cash Paid
Interest Expense
Increase in Carrying Value
Carrying Value
(A)
(B) = 16000,000 x 0.04
( C )
Beginning CV x 0.05
(D) =C - B
(E)= Beginning CV + Increase in CV
01/01/12
14,129,666
6/30/12
640,000
706483
66,483
14,196,149
12/31/12
640,000
709,807
69,807
14,265,956
6/30/13
640,000
713,298
73,298
14,339,254
12/31/13
640,000
716,963
76,963
14,416,217
Answer = $ 14,416,217 ( Option C )
Date
Cash Paid
Interest Expense
Increase in Carrying Value
Carrying Value
(A)
(B) = 16000,000 x 0.04
( C )
Beginning CV x 0.05
(D) =C - B
(E)= Beginning CV + Increase in CV
01/01/12
14,129,666
6/30/12
640,000
706483
66,483
14,196,149
12/31/12
640,000
709,807
69,807
14,265,956
6/30/13
640,000
713,298
73,298
14,339,254
12/31/13
640,000
716,963
76,963
14,416,217
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