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14 October, 09:45

Enviro company issues 10%, 10-year bonds with a par value of $330,000 and semiannual interest payments. on the issue date, the annual market rate for these bonds is 12%, which implies a selling price of 88 1/2.

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  1. 14 October, 13:21
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    Cash 292,050 debit

    Discount on BP 37,950 debit

    Bonds Payable 330,000 credit

    Explanation:

    we have to multiply the face value y the quoted value

    330,000 x 88 1/2 = 292,050

    The difference between the face value and the cash proceeds will be considered premium or discount. In this case; as the proceeds are lower than face value is a discount.

    discount on bonds payable: 330,000 - 292,050 = 37,950
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Home » Business » Enviro company issues 10%, 10-year bonds with a par value of $330,000 and semiannual interest payments. on the issue date, the annual market rate for these bonds is 12%, which implies a selling price of 88 1/2.
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