Final answer:
The carrying amount of Toland Sales' bond after the first interest payment on June 30, 2017, is $20,656, calculated by amortizing the bond discount using the straight-line method and adding it back to the issue price.
Step-by-step explanation:
To calculate the carrying amount after the first interest payment on June 30, 2017, for Toland Sales' bond issued on January 1, 2017, we need to follow these steps:
- First, calculate the total bond discount by subtracting the issue price from the face value of the bond. In this case, $26,000 (face value) - $20,300 (issued price) = $5,700.
- Next, we need to determine the annual amortization of the discount, which is done using the straight-line method. This means the discount is divided equally over the life of the bond. For an eight-year bond that pays semiannual interest, there are 16 total payments. So, the annual amortization is $5,700 / 16 or $356.25 per semiannual period.
- Then, we add the amortized amount back to the issue price to find the carrying amount after the first payment. $20,300 (issued price) + $356.25 (amortized amount) = $20,656.25.
Therefore, after the first interest payment, the carrying amount of the bond will be $20,656 (rounded to the nearest dollar).