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A bond has a Bonds Payable credit balance of $100,000 and a Premium on Bonds Payable credit balance of $3,015. What is the carrying amount of the bond?
A$96,985
B$103,015
C$100,000
D$3,015
Answer & Solution
Correct answer: B. $103,015
1. For a bond issued at a premium, carrying amount = Bonds Payable balance plus Premium on Bonds Payable balance.
2. Compute: \$100{,}000 + \$3{,}015 = \$103{,}015.
3. The carrying amount is $103,015.
4. Option A wrongly subtracts the premium; a premium increases the carrying amount above face.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §5.4 "Carrying Amount of Bonds Issued at a Premium", p.233_
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