Accountıng Iı Deneme Sınavı Sorusu #1407346
On January 1, 2019, Saint Corp. issues 100,000 TL, 5-year, 10% due in 5 years with 10 percent interest payable annually at year end. At the time of issue market rate for such bonds is 8 percent. If present value of the bonds is 107,985 TL, the entry to record the issuance of the bonds would include a:
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credit to Premium on Long Term Bonds Payable 7,985 TL |
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credit to Discount on Long Term Bonds Payable 7,985 TL |
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debit to Discount on Long Term Bonds Payable 7,985 TL |
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debit to Premium on Long Term Bonds Payable 7,985 TL |
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credit to Long Term Bonds Payable 7,985 TL |
Bonds issued at premium means, market interest rate is less than the stated interest rate of the bond issued. In other words, since the stated interest rate is more than the interest rate offered by any other investment instrument in the market, investors will pay more than the face value of the bond.
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