The Thomas Marley Fitness Gym has $700,000 of 20-year bonds payable outstanding. These bonds were issued at a $77,000 discount 10 years ago. The company uses the straight-line amortization method for these bonds. The current carrying amount of the bonds payable is

To calculate the current carrying amount of the bonds payable, we have to account for the amortization of the discount over the life of the bonds. Since the Thomas Marley Fitness Gym uses the straight-line amortization method, the discount is evenly distributed over the life of the bonds.

1. First, establish the total amount to be amortized. The total initial discount on the bonds was $77,000.

2. Determine the number of years over which the discount is to be amortized. Since these are 20-year bonds and they were issued 10 years ago, the total amortization period is 20 years.

3. Calculate the annual amortization amount. Divide the total discount by the number of years to determine the amount amortized each year. Annual Amortization Amount = Total Discount / Number of Years Annual Amortization Amount = $77,000 / 20 years Annual Amortization Amount = $3,850

4. Calculate the total amortized discount for the 10 years that the bonds have been outstanding. Total Amortized Discount = Annual Amortization Amount x Number of Years Elapsed Total Amortized Discount = $3,850 x 10 years Total Amortized Discount = $38,500

5. Determine the unamortized discount. Subtract the total amortized discount from the initial total discount. Unamortized Discount = Total Discount - Total Amortized Discount Unamortized Discount = $77,000 - $38,500 Unamortized Discount = $38,500

6. Finally, the current carrying amount of the bonds payable can be calculated by subtracting the unamortized discount from the face value of the bonds. Current Carrying Amount = Face Value of Bonds - Unamortized Discount Current Carrying Amount = $700,000 - $38,500 Current Carrying Amount = $661,500

So, the current carrying amount of the bonds payable is $661,500.