Score 033 of 1 pt S1210 similar to On January 1 2018 Peters

Score: 0.33 of 1 pt & S12-10 (similar to) On January 1. 2018. Peterson Company issued S450.000 of 496, five-year bonds payable at 104, Peterson Comp To retire the bonds, Peterson pays the market price of 89 Read the requirements (Assume bonds payable are amortized using the straight-line amortization method.) Requirement 1. What is Peterson Company\'s carrying amount of the bonds payable on the retirement date? The carying amount of the bonds payable on the retirement date is s 464,400 Requirement 2. How much cash must Peterson Company pay to retire the bonds payable? To retire the bonds, Peterson Company must pay $ e any inber in the edit elds and then click Check Answer esc

Solution

1.What is Peterson’s carrying amount of the bonds payable on the retirement date. Cash Received or Market Price = $450,000 x 104% $468,000.00 Less: Bonds Payable $450,000.00 Bonds issued at Premium $18,000.00 Amortization of bond premium $18,000 / 5 periods $3,600.00 Face value of the bonds being retired $450,000.00 Plus: Premium ($18,000 – ($3,600 × 1)) $14,400.00 Carrying amount of bonds payable on the retirement date $464,400.00 b) Market price paid to retire the bonds ($450,000 × 0.89) $400,500.00