Lopez Plastics Co. (LPC) issued callable bonds on January 1, 2018. LPC\'s accoun

Question

Lopez Plastics Co. (LPC) issued callable bonds on January 1, 2018. LPC's accountant has projected the following amortization schedule from issuance until maturity: Cash interest Effective interest Decrease in Date 1/1/2018 6/30/2018 12/31/2018 6/30/2019 12/31/2019 6/30/2020 12/31/2020 6/30/2021 12/31/2021 Outstanding balance $207,020 206,230 205,417 204,580 203,717 202,829 201,913 200,971 200,000 balance S 7,000 7,000 7,000 7,000 7,000 7,000 7.000 7,000 S6,211 6,187 6,163 6,137 6,112 6,085 6.057 6,029 S 789 813 837 863 915 943 971 LPC issued the bonds Cannot be determined from the given information At a premium At par At a discount

Explanation / Answer

LPC bonds are issued at

Premium

( as we see the bond issue price of $207,020 is more than than the face value of $200,000 so the bonds are said to be issue at premium)

LPC bonds are issued at

Premium

( as we see the bond issue price of $207,020 is more than than the face value of $200,000 so the bonds are said to be issue at premium)

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