A $5,000, 7% bond is quoted at 95. When the bond is issued, the Bonds Payable account will be increased by:
A) $4,750.
B) $4,650.
C) $5,000.
D) $5,100.

Question

Quizplus · Accepted Answer

The bond is quoted at 95, which means that the bond is being sold for 95% of its face value. The face value of the bond is $5,000, so 95% of $5,000 is $4,750. However, the Bonds Payable account will be increased by the full face value of the bond, which is $5,000. Therefore, the answer is C.

A $5,000, 7% Bond Is Quoted at 95