Ralston Company sold and issued a $100,000, 10%, bond at 99.Which of the following statements is true?

Question

Quizplus · Accepted Answer

The bond sold at a discount because it was sold at 99% of its face value. The coupon rate is irrelevant in determining whether a bond sells at a premium or a discount. The effective interest rate takes into account both the coupon rate and the selling price, so it cannot be used to determine whether the bond sold at a premium or a discount. Accrued interest is added to the selling price to determine the total cash received from the sale of the bond, but it has no bearing on whether the bond sold at a premium or a discount.

Ralston Company Sold and Issued a $100,000, 10%, Bond at 99.Which