On February 28,2015,$5,000,000 of 6%,10-year bonds payable,dated December 31,2014,are issued.Interest on the bonds is payable semiannually each June 30 and December 31.If the total amount received (including accrued interest)by the issuing corporation is $5,060,000,which of the following is correct?

Question

Quizplus · Accepted Answer

The total amount received by the corporation is $5,060,000, which is greater than the face value of the bonds ($5,000,000). Therefore, the bonds were issued at a premium. The amount of cash paid to bondholders on the next interest date, June 30, 2015, cannot be determined from the information given.

On February 28,2015,$5,000,000 of 6%,10-Year Bonds Payable,dated December 31,2014,are Issued