On January 1 of Year 1, Congo Express Airways issued $3,600,000 of 6% bonds that

Question

On January 1 of Year 1, Congo Express Airways issued $3,600,000 of 6% bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $3,270,000 and the market rate of interest for similar bonds is 7%. The bond premium or discount is being amortized at a rate of $11,000 every six months. The company's December 31, Year 1 balance sheet should reflect total liabilities associated with the bond issue in the amount of: o $3,908,000 $3,400,000 $3.292,00o. $4,016,000 O $3,184,000.

Explanation / Answer

Calculate total liabilities associated with the bond issue in the amount of :

so answer is c) $3292000

Long term liabilities Bonds payable 3600000 Less : Unamortized discount on bonds payable (330000-22000) (308000) 3292000

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