31. OnJanuary 1, Patterson Inc. issued $4,000,000, 9% bonds for$3,756,000. The market rate...31....

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Accounting

31.       OnJanuary 1, Patterson Inc. issued $4,000,000, 9% bonds for$3,756,000. The market rate of interest for these bonds is 10%.Interest is payable annually on December 31. Patterson uses theeffective-interest method of amortizing bond discount. At the endof the second year, Patterson should report unamortized bonddiscount of
a.   $118,400.
b.   $228,400.
c.   $211,240.
d.   $204,000.

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3.9 Ratings (395 Votes)

Q31 c. $211,240.
Face Value	4,000,000.00
Issue Price	3,756,000.00
Bond Discount	244,000.00

Date	Interest Payment = Stated Value *9% = A	Interest Exp= Prev BV*10% = B	Amortisation of Bond Dis = B-A	DR bal in Bond Dis C	Cr Bal in Bond Payable D	Book Value of Bonds = D-C
Jan 01				244,000.00	4,000,000.00	3,756,000.00
Year 01 - Dec 31	360,000.00	375,600.00	15,600.00	228,400.00	4,000,000.00	3,771,600.00
Year 02 - Dec 31	360,000.00	377,160.00	17,160.00	211,240.00	4,000,000.00	3,788,760.00

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In: Accounting31. OnJanuary 1, Patterson Inc. issued $4,000,000, 9% bonds for$3,756,000. The market rate...31. OnJanuary 1, Patterson Inc. issued $4,000,000, 9% bonds for$3,756,000. The market rate of interest for these bonds is 10%.Interest is payable annually on December 31. Patterson uses theeffective-interest method of amortizing bond discount. At the endof the second year, Patterson should report unamortized bonddiscount ofa. $118,400.b. $228,400.c. $211,240.d. $204,000.