Question

1. Why would bonds ever sell at a premium?

   		Stated Rate = Market Rate
   		Stated Rate > Market Rate
   		Stated Rate < Market Rate

QUESTION 2

1. Why would bonds ever sell at a discount?

   		Stated Rate = Market Rate
   		Stated Rate > Market Rate
   		Stated Rate < Market Rate

QUESTION 3

1. At what amount do bonds sell for if the Stated Rate is equal to the Market Rate?

QUESTION 4

1. $500,000, 10%, 20 year bonds sell at 102.These bonds are selling at a

   		Discount
   		Premium

1 points   

QUESTION 5

1. Give the amount of cash received for these bonds when sold.

1 points   

QUESTION 6

1. On the day the bonds were dated, Willow Corp. issued 12% bonds having a face value of $100,000 for $95,233. Type the three lines of the journal entry to record the sale of the bonds? 1.  2.3.

1 points   

QUESTION 7

1. What amount of interest would be paid to bondholders annually?

1 points   

QUESTION 8

1. What amount of interest would be paid to bondholders semi-annually

Answer 1

1.)	Bond will be sold at premium, when stated rate is more than market rate.
	Correct answer is option 2.
2.)	Bond will be sold at discount, when stated rate is less than market rate.
	Correct answer is option 3.
3.)	The bond will be sold at Par if the stated rate is equal to market rate.
4.)	These bonds are selling at premium.
	Correct answer is option 2.

5.)

Cash Received

$ 510,000

(500,000 x 102% )

6.)	Account Tiltes	Debit $	Credit $
	Cash	95,233
	Discount on Bond	4,767
	Bond Payable		100,000

7.)	Interest would be paid to bondholders annually of $ 12,000. ( 100,000 x 12% )
8.)	Interest would be paid to bondholders semi-annually of $ 6,000. ( 100,000 x 12% x 1/2 )