On December 31, 20X5. Cobb issued 2,000 of its 10%, $1,000 bonds at 99. The issuance price established a bond discount of $20,000. In connection with the sale of these bonds. Cobb paid the following expenses:

Legal and accounting fees $45,000

Printing of the prospectus 55,000

Underwriting fees 85,000

In Cobb's December 31, 20X5, balance sheet, bond issue costs total

a. $120,000.

b. $130,000.

c. $160,000.

d. $185,000.

Question

Business

Landin Fletcher

6 December, 02:36

On December 31, 20X5. Cobb issued 2,000 of its 10%, $1,000 bonds at 99. The issuance price established a bond discount of $20,000. In connection with the sale of these bonds. Cobb paid the following expenses:

Legal and accounting fees $45,000

Printing of the prospectus 55,000

Underwriting fees 85,000

In Cobb's December 31, 20X5, balance sheet, bond issue costs total

a. $120,000.

b. $130,000.

c. $160,000.

d. $185,000.

+3

Answers (1)

Know the Answer?

Carsen Holland · Answer 1

D. $185,000

Explanation:

Issuance costs are incurred to use the bond for a particular or specific year. Bond issuance costs are as follows:

Legal fees, accounting fees, underwriting fees, subscription fees, etc. In this case, all the costs are related to facilitating the use of bonds. Therefore, the bond issuance costs are -

Legal and accounting fees $45,000

Printing of the prospectus $55,000

Underwriting fees $85,000

Total costs $185,000