What is the carrying value of the liability appearing on the December 31,Year 1 balance sheet?
A)$80,400
B)$87,600
C)$90,000
D)$88,800

Question

Quizplus · Accepted Answer

Discount = $90,000 × 0.04 × 1 = $3,600
Four months (Sept.1-Dec.31)have passed.
Amortization of discount = Discount of $3,600 × (4 ÷ 12)= $1,200
Carrying value = Notes payable account balance of $90,000 - Discount on notes payable account balance of ($3,600- $1,200)= $87,600

What Is the Carrying Value of the Liability Appearing on the December