3-1: The Acme Company issued 5%, 10-year bonds
payable at 90 on December 31, 2010.
At December 31,...

Question

3-1: The Acme Company issued 5%, 10-year bonds
payable at 90 on December 31, 2010.
At December 31, 2012, Acme reported the bonds payable as follows:

Bonds Payable 400,000
 less: Discount 32,000 368,000

Acme uses the straight line amortization method and pays
interest twice per year on June 30
and December 31.

Required: a: What is the maturity value of the
bonds?

b: What is the carrying amount of the bonds
on December 31, 2012?

c: What is the annual cash interest payment
on the bonds?

d: How much interest expense will Acme record
each year?

e: What will be the
carrying amount of the bonds on December 31, 2014

Robert · Accepted Answer

3-1: The Acme Company issued 5%, 10-year bonds payable at 90 on December 
31, 2010. At December 31, 2012, Acme reported the bonds payable as follows: 
Bonds Payable 400,000 
less: Discount    32,000  368,000 
Acme uses the straight line amortization method and pays interest twice per 
year on June 30 and December 31. 
Required:
a: What is the maturity value of the bonds? 
 The Maturity value of the bonds is $400,000 
 (Given in the question Bonds Payable - $400,

3-1: The Acme Company issued 5%, 10-year bonds payable at 90 on December 31, 2010. At December 31, 2012, Acme reported the bonds payable as follows: Bonds Payable 400,000 less: Discount 32,000 368,000...

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