Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

11. Long Term Liabilities

Introduction to Bonds and Bond Characteristics

Financial Accounting

11. Long Term Liabilities

Introduction to Bonds and Bond Characteristics

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Multiple Choice

On December 31, Wintergreen, Inc. issued $150,000 of 7% 10-year bonds at a price of 93.25. What amount of cash did Wintergreen, Inc. receive from the bond issuance?

$150,000

$93,250

$139,875

$104,625

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Verified step by step guidance

Step 1: Understand the problem. Wintergreen, Inc. issued bonds with a face value of $150,000 at a price of 93.25. The price of 93.25 represents a percentage of the face value, meaning the bonds were issued at a discount. The goal is to calculate the cash received from the bond issuance.

Step 2: Convert the bond price percentage into a decimal. To do this, divide 93.25 by 100. This gives the decimal equivalent of the bond price.

Step 3: Multiply the face value of the bonds ($150,000) by the decimal equivalent of the bond price (from Step 2). This calculation determines the cash received from the bond issuance.

Step 4: Verify the calculation by ensuring the result represents the discounted price of the bonds, which is less than the face value of $150,000.

Step 5: Interpret the result. The cash received from the bond issuance is the amount Wintergreen, Inc. will record as proceeds from the sale of the bonds, which is less than the face value due to the discount.