Question

Crystal Glassware Company issues $1,043,000 of it's 13​%, 10-year bonds at 99 on February​ 28, 2019. The bonds pay interest on February 28 and August 31. Assume that Crystal uses the straight-line method for amortization. What net amount will be reported for the bonds on the August​ 31, 2019 balance​ sheet?

Answer 1

Answer

• Net amount will be reported for the bonds on the August​ 31, 2019 balance​ sheet
  = $ 1,033,092 or $ 1,033,091.50
• Working

A	Face Value	$1,043,000.00
B = A x 99/100	Issue Price	$1,032,570.00
C = A - B	Discount on Bonds Payable	$10,430.00
D	Life (years)	10
E = D x 2	No of semi annual interest payments	20
F = C/E	Straight Line amortisation	$521.50
G = C - F	Unamortised discount balance on Aug 31, 2019 (after #1 semi annual payment)	$9,908.50
H = A - G	Net Amount at which the Bonds will be reported at	$1,033,091.50	Answer