Asked by Sandra Feliciano on Jun 22, 2024
Verified
If $1,000,000 of 8% bonds are issued at 98 1/2, the amount of cash received from the sale is
A) $1,080,000
B) $985,000
C) $1,000,000
D) $1,027,500
Bonds Issued
This term refers to the process where an entity, such as a corporation or government, issues debt securities to raise funds from investors.
Cash Received
The total amount of cash received by a company during a specific period of time, from various sources.
- Understand the impact of issuing bonds at premiums or discounts on financial reports and associated transactions.
Verified Answer
JK
Jacqueline Khaw Sze ErnJun 24, 2024
Final Answer :
B
Explanation :
The cash received from the sale of bonds issued at a discount (98 1/2% of the face value) is calculated as $1,000,000 * 98.5% = $985,000.
Learning Objectives
- Understand the impact of issuing bonds at premiums or discounts on financial reports and associated transactions.