Determine what is carrying value of the bonds on december

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On January 1, Year 1, Weller Company issued bonds with a $400,000 face value, a stated rate of interest of 10%, and a 10-year term to maturity. Weller uses the effective interest method to amortize bond discounts and premiums. The market rate of interest on the date of issuance was 8%. Interest is paid annually on December 31.

 Problem 1: Assuming Weller issued the bonds for $431,940, what is the carrying value of the bonds on the December 31, Year 3?

A. $420,615
B. $426,495
C.$414,264
D.$404,800

Reference no: EM132718254

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