Determine the carrying value on january

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Question 1 - On January 1, 2017, Babb Trailers, Inc. issued $6,500,000 of par value bonds for $6,200,000. The bonds pay interest semiannually on January 1 and July 1. The contract rate of interest is 3% while the market rate of interest for similar bonds is 5%. The bond premium or discount is being amortized at a rate of $10,000 every six months. Determine the life of these bonds?

A. 15 years

B. 30 years WRONG

C. 26.5 years

D. 32 years

E. 35 years WRONG

Question 2 - On January 1, 2017, Babb Trailers, Inc. issued $6,500,000 of par value bonds for $6,200,000. The bonds pay interest semiannually on January 1 and July 1. The contract rate of interest is 3% while the market rate of interest for similar bonds is 5%. The bond premium or discount is being amortized at a rate of $10,000 every six months. Determine the carrying value on January 2, 2019?

A. $6,160,000 WRONG

B. $6,540,000 WRONG

C. $6,460,000

D. $6,240,000

Reference no: EM132562708

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