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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Definitions:

Pneumatophore

Roots that extend up out of the water in swampy areas and are thought to provide aeration between the atmosphere and submerged roots.

Storage Root

A root modified for the storage of nutrients and energy, typically in the form of carbohydrates, as seen in carrots and beets.

Photosynthetic Root

Roots capable of photosynthesis, typically found in some aquatic plants, allowing them to absorb carbon dioxide directly from their environment.

Arbuscule

A specialized tree-like structure formed within the cells of plant roots by certain types of fungi in a symbiotic mycorrhizal relationship.