Eddie Industries issues $1,500,000 of 8% bonds at 105,the amount of cash received from the sale is
A)$1,425,000
B)$1,080,000
C)$1,000,000
D)$1,575,000

Question

Quizplus · Accepted Answer

The formula to calculate the amount of cash received from the sale of bonds is:

Cash received = Face value of bonds x Issue price

In this case, the face value of the bonds is $1,500,000 and the issue price is 105% of the face value, which is:

$1,500,000 x 1.05 = $1,575,000

Therefore, the amount of cash received from the sale is $1,575,000, which corresponds to answer choice D.

Eddie Industries Issues $1,500,000 of 8% Bonds at 105,the Amount