Flounder Inc.
Use the information provided for Flounder Inc. to answer the question(s) using the effective interest method.
On January 1, 2012, Flounder Inc. issued $800,000, 10-year, 9% bonds for $662,356. The bonds pay interest on June 30 and December 31. The market rate is 12%.
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Refer to the information provided for Flounder Inc. What is the carrying value of the bonds at the end of the ten years before the final maturity payment is made?
A) $800,000
B) $662,356
C) $137,643
D) $0

Question

Flounder Inc. 
Use the information provided for Flounder Inc. to answer the question(s) using the effective interest method.
On January 1, 2012, Flounder Inc. issued $800,000, 10-year, 9% bonds for $662,356. The bonds pay interest on June 30 and December 31. The market rate is 12%.
-
Refer to the information provided for Flounder Inc. What is the carrying value of the bonds at the end of the ten years before the final maturity payment is made?
A) $800,000
B) $662,356
C) $137,643
D) $0

Quizplus · Accepted Answer

The carrying value of the bonds at the end of the ten years before the final maturity payment is made will be equal to the face value of the bonds, which is $800,000.

Flounder Inc. Use the Information Provided for Flounder Inc. to Answer the to Answer