Adonis Corporation issued 10-year, 7% bonds with a par value of $220,000. Interest is paid semiannually. The market rate on the issue date was 6%. Adonis received $236,371 in cash proceeds. Which of the followingstatements is true?Multiple ChoiceAdonis must pay $220,000 at maturity plus 20 interest payments of $6,600 each.Adonis must pay $236,371 at maturity plus 20 interest payments of $7,700 each.Adonis must pay $236,371 at maturity and no interest payments.Adonis must pay $220,000 at maturity and no interest payments.Adonis must pay $220,000 at maturity plus 20 interest payments of $7,700 each.

SOLUTION- BONDS IS A FIXED INCOME INSTRUMENT THAT REPRESENT A LOAN MADE BY AN INVESTOR TO A…

Answered: Adonis Corporation issued 10-year, 7%…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, Elias Corporation issued 10% bonds with a face value of $100,000. The bonds are sold for $97,000. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 10 years from now. Elias records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 of the first year is a. $10,000 b. $3,000 C. $833 d. $10,300
The Wilfred Company sold 8% bonds, dated January 1, with a face amount of $90 million on January 1, year 1 to Rexton-Base Corporation. The bonds mature on December 31, year 10 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. Prepare the journal entry to record interest revenue on June 30, year 1 (at the effective rate).
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