Question

On October 1, 2021, Ivanhoe Company purchased to hold to maturity, 3000, $1000, 8% bonds for $3460000 which includes $50000 accrued interest. The bonds, which mature on February 1, 2030, pay interest semiannually on February 1 and August 1. Ivanhoe uses the straight-line method of amortization. The bonds should be reported in the December 31, 2021 balance sheet at a carrying value of

Answer 1

$3,422,300

Step-by-step explanation:

Calculation to determine what bonds should be reported in the December 31, 2021 balance sheet at a carrying value

Bonds=($3,460,000 - $50,000)+[($3,460,000 - $50,000)-(3,000*$1,000)*3/100]

Bonds=$3,410,000 +($3,410,000 -$3,000,000 *3/100)

Bonds=$3,410,000+($410,000*3/100)

Bonds=$3,410,000+$12,300

Bonds=$3,422,300

Therefore bonds should be reported in the December 31, 2021 balance sheet at a carrying value of $3,422,300