The carrying value of a bond immediately after the bond was issued was $121,250. The bond price was 97. The face value of the bond was:
A)$121,250
B)$123,750.
C)$121,250.
D)$125,000.

Question

Quizplus · Accepted Answer

The bond was issued at a discounted price of 97% of its face value, which means that the actual amount paid by investors to purchase the bond was only $97 for every $100 of face value.

To find the face value, we can use the formula:

Bond price = (Face value / 100) x Bond percentage

Plugging in the values given in the problem, we get:

97 = (Face value / 100) x 100

Solving for Face value, we get:

Face value = 97 / 100 x Bond price = 0.97 x $125,000 = $121,250

Therefore, the face value of the bond was $125,000 (option D).

The Carrying Value of a Bond Immediately After the Bond