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Bonds with a face value of P5,000,000 carrying a stated interest rate of 12% payable semi- annually on March 1 and September 1 were issued on July 1. The total proceeds from the issue amounted to P5,200,000. The best explanation for the excess amount received over face value is the bonds were sold at a premium. the bonds were issued at face value plus accrued interest. no explanation is possible without knowing the maturity date of the bond issue. the bonds were sold at a higher effective interest rate.

Bonds with a face value of P5,000,000 carrying a stated interest rate of 12% payable semi- annually on March 1 and September 1 were issued on July 1. The total proceeds from the issue amounted to P5,200,000. The best explanation for the excess amount received over face value is the bonds were sold at a premium. the bonds were issued at face value plus accrued interest. no explanation is possible without knowing the maturity date of the bond issue. the bonds were sold at a higher effective interest rate.

FINANCIAL ACCOUNTING
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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Bonds with a face value of P5,000,000 carrying a stated interest rate of 12% payable semi- annually on March 1 and September 1 were issued on July 1. The total proceeds from the issue amounted to P5,200,000. The best explanation for the excess amount received over face value is * the bonds were sold at a premium. the bonds were issued at face value plus accrued interest. O no explanation is possible without knowing the maturity date of the bond issue. the bonds were sold at a higher effective interest rate.
Transcribed Image Text:Bonds with a face value of P5,000,000 carrying a stated interest rate of 12% payable semi- annually on March 1 and September 1 were issued on July 1. The total proceeds from the issue amounted to P5,200,000. The best explanation for the excess amount received over face value is * the bonds were sold at a premium. the bonds were issued at face value plus accrued interest. O no explanation is possible without knowing the maturity date of the bond issue. the bonds were sold at a higher effective interest rate.
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