On January 1, 20x1, Pitchfork Company issued a $750,000, 8%, 5-year bond for $860,401 andincurred debt issuance costs of $20,000. The bond pays interest annually every December 31st. Atof the date of issuance, the market rate was 6% APR. The adjusted market rate is 6.34%.What is the carrying value of the bond at December 31, 20x1, after the first interest payment hasbeen recorded? The company amortizes the discount and debt issuance costs using the effectiveinterest method.$830,825$833,682$838,682$840,401

On January 1, 20x1, Pitchfork Company issued a $750,000, 8%, 5-year bond for $860,401 and incurred debt issuance costs of $20,000. The bond pays interest annually every December 31st. At of the date of issuance, the market rate was 6% APR. The adjusted market rate is 6.34%.

On January 1, 20x1, Pitchfork Company issued a $750,000, 8%, 5-year bond for $860,401 and incurred debt issuance costs of $20,000. The bond pays interest annually every December 31st. At of the date of issuance, the market rate was 6% APR. The adjusted market rate is 6.34%.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 3EB: Smashing Cantaloupes Inc. issued 5-year bonds with a par value of $35,000 and an 8% semiannual...

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Question

On January 1, 20x1, Pitchfork Company issued a $750,000, 8%, 5-year bond for $860,401 and
incurred debt issuance costs of $20,000. The bond pays interest annually every December 31st. At
of the date of issuance, the market rate was 6% APR. The adjusted market rate is 6.34%.
What is the carrying value of the bond at December 31, 20x1, after the first interest payment has
been recorded? The company amortizes the discount and debt issuance costs using the effective
interest method.
$830,825
$833,682
$838,682
$840,401

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