On January 1, Year 1, Burton Corporation issued bonds with a face value of $200,000 for $196,000 cash.: Which of the following correctly describes the related transaction?

Question

Quizplus · Accepted Answer

The face value of the bonds is $200,000 and the company received $196,000 in cash for the issuance, which means the bonds were issued at a discount. The discount is calculated as the face value ($200,000) minus the cash received ($196,000), which equals $4,000. Therefore, the bonds were issued at 98 ($196,000/$200,000).

On January 1, Year 1, Burton Corporation Issued Bonds with a Face