Adonis Corporation issued 10-year, 7% bonds with a par value of $280,000. Intere

Question

Adonis Corporation issued 10-year, 7% bonds with a par value of $280,000. Interest is paid semiannually. The market rate on the issue date was 6%. Adonis received $300,836 in cash proceeds, which of the statements is true? O Adidas must pay $280.000 at maturty and no interest payments. O Adidas must pay $280.000 at maturty plus 20 interest payments of $8.400 each. O Adidas must pay $280,000 at maturty plus 20 interest payments of $9.800 each. O Adidas must pay $300,836 at maturty and no interest payments O Adidas must pay $300,836 at maturity plus 20 interest payments of $9.800 each at maturty plus 20 interest payments of $9.800 each. References Leaming Oiective 14.Pl Prepare entries to record bos nsuange and wrteret expense Multiple Choice Difficulty. 2 Medium inng Opective: 14 Pa Compute and record band prem Type here to search

Explanation / Answer

IF we did not have any information of maturity of bonds then we assume maturity of bonds at par.

Interest payment = 280000*7%*6/12 = 9800

interest is semiannually so we have to paid 9800 in each 6 month.

so answer is c) Adidas must pay $280000 at maturity plus 20 interest payment of $9800 each.

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