Net Work Corporation, whose annual accounting period ends on

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Net Work Corporation, whose annual accounting period ends on December 31, issued the following bonds:Date of bonds: January 1, 2009.Maturity amount and date: $200,000 due in 10 years (December 31, 2018).Interest: 10 percent per year payable each December 31. Date issued: January 1, 2009.Provide the following amounts to be reported on the January 1, 2009, financial statements immediately after the bonds were issuedJanuary 1, 2009 Financial Statements: Part A Part B Part C (Issued at 100) (97) (101)(A) Bonds Payable (B) Unamortized premium (or discount) (C) Carrying valueCan someone please help me with this problem and explain to me how you got the answer so I know. Thank You.

Mr. Bertha Ziemann IV · Accepted Answer

Part A(A) Bonds Payable This is always the face value, so $200,000(B) Unamortized premium (or discount)$0, since the bonds are issued at 100%(C) Carrying value (CV)CV = Face value – Discount on bonds payable OR Face value + Premium on bonds payable, so $200,000Part B(A) Bonds Payable This is always the face value, so $200,000(B) Unamortized premium (or discount)Since the bonds are issued at 97, i.e. BELOW face value, there would be a discount of $6,000 ($200,000 x 3%)(C) Carrying valueCV = Face value – Discount, so $200,000 – $6,000 = $194,000 (proof: $200,000 x 0.97)Part C (A) Bonds Payable This is always the face value, so $200,000(B) Unamortized premium (or discount)Since the bonds are issued at 101, i.e., ABOVE face value, there would be a premium of $2,000 ($200,000 x 1%)(C) Carrying valueCV = Face value + Premium, so $200,000 + $2,000 = $202,000 (proof: $200,000 x 1.01)

Mr. Bertha Ziemann IV · Answer

I agree with most of what has been said

Kale Eichmann

Net Work Corporation, whose annual accounting period ends on

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