Webster Company Issues $1,000,000 Face Value, 6%, 5-Year Bonds Payable

question 114

Multiple Choice

Webster Company issues $1,000,000 face value, 6%, 5-year bonds payable on 31 December 2013. Interest is paid semiannually each 30 June and 31 December. The bonds sell at a price of 97; Webster uses the straight-line method of amortizing bond discount or premium.
-The carrying value of this liability in Webster Company's 31 December 2014, statement of financial position is:

• A) $1,000,000.
• B) $970,000.
• C) $976,000.
• D) $967,000.

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Definitions:

Withdraw

To remove funds from a bank account or to take back an offer or statement.

Annual Annuity

A fixed sum of money paid to someone each year, typically for the rest of their life or for a specified period.

Compounded Annually

Compounded annually refers to the process of earning interest on both the initial principal and the accumulated interest from previous periods, calculated once per year.

Save Each Year

The practice of setting aside a certain portion of income or revenue annually for future use, such as investments or emergency funds.