Question

If $1,034,000 of 6% bonds are issued at 102 1/2, what is the amount of cash received from the sale?

Select the correct answer.

$1,059,850

$1,034,000

$775,500

$1,096,040

Answer 1

Issue price of bond is $ 102 ½ or $ 102.50. So, face value of each bond is $ 100.

Number of bonds issued = Total face value/Face value of each bond

                                        = $ 1,034,000/$ 100 = 10,340

Total cash received = Issue price x Number of bonds = $ 102.5 x 10,340 = $ 1,059,850

Total cash received from the sales is $ 1,059,850

Option “$ 1,059,850” is correct answer.