On the Date of Issue, Chudzick Corporation Sells $5 Million

question 214

Multiple Choice

On the date of issue, Chudzick Corporation sells $5 million of 5-year bonds at 97. The entry to record the sale will include the following debits and credits: Bonds Payable Discount on Bonds Payable

• A) $4,850,000 Cr. $0 Dr.
• B) $5,000,000 Cr. $150,000 Dr.
• C) $5,000,000 Cr. $1,250,000 Dr.
• D) $5,000,000 Cr. $15,000 Dr.

---

Definitions:

Future Growth Prospects

The potential or expectations for a business or investment to expand or increase in value over time.

General Motors

A global American corporation with its main office in Detroit, specializing in the design, production, marketing, and sales of automobiles and their components.

Sears

An American chain of department stores known for its significant historical impact on retail but has struggled financially in recent years.

Sustainable Growth Rate (SGR)

The growth rate a firm can maintain given its debt capacity, ROE, and retention ratio.