On January 1, Year 1, Wayne Company Issued Bonds with a Face

question 62

Multiple Choice

On January 1, Year 1, Wayne Company issued bonds with a face value of $600,000, a 6% stated rate of interest, and a 10-year term. Interest is payable in cash on December 31 of each year. Wayne uses the straight-line method to amortize bond discounts and premiums. Assuming Wayne issued the bonds for 102.5, what is the carrying value of the bonds on the December 31, Year 1 balance sheet?

• A)$601,500
• B)$613,500
• C)$615,000
• D)$616,500

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Definitions:

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate estimated overhead costs to products or job orders based on a chosen activity base.

Direct Labour-hours

The total hours worked by employees directly involved in the manufacturing process.

Work in Process

Items that are in the process of being manufactured but are not yet complete.

Work in Process

Also known as work in progress, it denotes the cost of unfinished goods in manufacturing at any given time.