On January 1, 2015, Carter Sales Issued $15,000 in Bonds

question 83

Multiple Choice

On January 1, 2015, Carter Sales issued $15,000 in bonds for $15,800. They were 8-year bonds with a stated rate of 9%, and pay semiannual interest. Carter Sales uses the straight-line method to amortize the bond premium. After the first interest payment on June 30, 2015, what was the bond carrying amount?

• A)$15,800
• B)$15,750
• C)$15,050
• D)$15,000

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Definitions:

Variable Expenses

Costs that fluctuate with the level of output or sales, such as raw materials and sales commissions.

Fixed Expenses

Costs that remain constant over a period and are not affected by changes in business activity levels.

Variable Expenses

Costs that vary directly with the level of activity or production output, such as raw materials and direct labor.

Break-even Point

The point at which total costs and total revenues are equal, meaning there is no profit or loss.