A $3,000, 7.5% bond is quoted at 97.5. When the bond is issued, the Bonds Payable account will be increased by:

Question

Quizplus · Accepted Answer

The quoted price of 97.5 means that the bond will be issued at a discount (below face value).

To calculate the amount of increase in the Bonds Payable account, we need to multiply the face value of the bond ($3,000) by the quoted price (97.5% or 0.975):

$3,000 x 0.975 = $2,925

Therefore, the correct answer is B) $3,000.