A Company Receives $102,000 When It Issues a Bond with a Face

question 13

Multiple Choice

A company receives $102,000 when it issues a bond with a face value of $100,000 and a stated interest rate of 7%.Which of the following statements is true?

• A)The annual interest expense is $7,000.
• B)The market interest rate is 7%.
• C)A contra account to bonds payable is not needed.
• D)The carrying value of the bonds will be $100,000 at maturity.

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