On January 1, 2017, Walker Sales issued $30,000 in bonds for $23,300. These are eight-year bonds with a stated rate of 11%, and pay semiannual interest. Walker Sales uses the straight-line method to amortize the bond discount. After the second interest payment on December 31, 2017, what is the bond carrying amount

Walker Sales

The bond carrying amount on December 31, 2017 is:

= $30,838.

Explanation:

a) Data and Calculations;

Face value of bonds = $30,000

Proceeds from the bonds issue on January 1, 2017 = $23,300

Bonds discount =  $6,700 ($30,000 - $23,300)

Stated interest rate = 11%

Semiannual payment = $1,650 (30,000 * 5.5%)

Semi-annual amortization of discount = $419 ($6,700/16)

June 30, 2017:

Interest expense $2,069

Cash payment       1,650

Amortization of discount = $419

Fair value of bonds = $30,419

December 31, 2017:

Interest expense $2,069

Cash payment       1,650

Amortization of discount = $419

Fair value of bonds = $30,838

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explanation:

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