Refer to Kaleidoscope Paint. What is the carrying value of the bonds after the first interest payment is made on June 30, 2013?
A)$480,745
B)$482,282
C)$503,245
D)$500,000

Question

Quizplus · Accepted Answer

To calculate the carrying value of the bonds after the first interest payment, we need to subtract the portion of the bond interest expense that has been paid from the initial carrying value of the bonds. 
The bond interest expense for the first year is ($500,000 x 10%) = $50,000. The interest payment on June 30th is half of that, which is $25,000. 
Therefore, the carrying value of the bonds after the first interest payment is: 
Initial carrying value - interest payment made = $482,282 
So, the correct answer is B.