Beluga Inc. issued 10-year bonds with a face value of $150,000 and a stated rate of 3% when the market rate was 4%. Interest was paid annually. The bonds were sold at 87.5. A. What was the sales price of the bonds? B. Were they issued at a discount, a premium, or at par?

Beluga Inc. issued 10-year bonds with a face value of $150,000 and a stated rate of 3% when the market rate was 4%. Interest was paid annually. The bonds were sold at 87.5. A. What was the sales price of the bonds? B. Were they issued at a discount, a premium, or at par?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 2EA: Beluga Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 3% when the...

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Question

Beluga Inc. issued 10-year bonds with a face value of $150,000 and a stated rate of 3% when the market rate was 4%. Interest was paid annually. The bonds were sold at 87.5.

A. What was the sales price of the bonds?

B. Were they issued at a discount, a premium, or at par?

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