Ans. Option B Discount of $2,000
Explanation and calculation: Let's say that the par value of bonds is $100.
Number of bonds issued = Face value / par value
= $100,000 / $100
= 1,000 bonds
Bonds are issued on $98 which is less than par value. It means the bonds are issued at discount.
Discount on bonds = Number of bonds issued * (Par value - Issue price)
= 1,000 * ($100 - $98)
= 1,000 * $2
= $2,000
If Issue price > Face value = Premium on bonds
If Issue price < Face value = Discount on bonds
If $100,000 (face value) in bonds are issued at 98, then the bonds were issued a...
If $100,000 (face value) in bonds are issued at 98, then the bonds were issued a a. premium of $2,000. discount of $2,000, C. gain of $2,000. d. loss of $2,000
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On
the day the bonds were dated, Willow Corp. issued 12% bonds having
a face value of $100,000 for $95,233
On the day the bonds were dated, Willow Corp. issued 12% bonds having a face value of $100,000 for $95,233. a. What entry is required to record the sale of the bonds? b. What amount of interest would be paid to bondholders annually?! c. What amount of interest would be paid to bondholders semi-annually?