Bonds with face value of P5,000,000 carrying a stated interest rate of 12% payable semiannually 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 the face value is that A. the bonds were sold at a premium. B. the bonds bear an interest rate lower than the market rate of interest at the date of bond issuance. C. the bonds were issued at face value plus accrued interest. D. the bonds were sold at a discount plus accrued interest.
Bonds with face value of P5,000,000 carrying a stated interest rate of 12% payable semiannually 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 the face value is that A. the bonds were sold at a premium. B. the bonds bear an interest rate lower than the market rate of interest at the date of bond issuance. C. the bonds were issued at face value plus accrued interest. D. the bonds were sold at a discount plus accrued interest.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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q11.
Bonds with face value of P5,000,000 carrying a stated interest rate of 12% payable semiannually 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 the face value is that
A. the bonds were sold at a premium.
B. the bonds bear an interest rate lower than the market rate of interest at the date of bond issuance.
C. the bonds were issued at face value plus accrued interest.
D. the bonds were sold at a discount plus accrued interest.
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