The Management of PT Authorized an Issue of $120,000 Bonds

question 73

Essay

The management of PT authorized an issue of $120,000 bonds payable, 6% (annual interest rate), dated January 1, 2000.The bonds mature on December 31, 2015 (5 years).Interest is payable each June 30 and December 31.The bonds were sold on May 1, 2010, at an effective (yield)rate of 8%.
(a)The bonds were sold at a ________ premium; discount (check one).
(b)Give the entry for PT to record the sale of the bonds on May 1, 2010.Show computations for the issue price.

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Definitions:

Stock of the Economy

The stock of the economy typically refers to the total value of assets, both financial and physical, possessed within an economy at a given time.

Expected Variance

A statistical measure that represents the dispersion of possible returns of an investment, used in portfolio theory to gauge risk.

Probability Distribution

A quantitative function that assesses and represents every imaginable value and probability for a random variable within a certain limit.

Stock of the Economy

An aggregate representation of the total value of all publicly traded companies within an economy.