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On January 1, 2018, Shay issues $700,000 of 10%, 15-year bonds at a price of 97¾. Six years later, on January 1, 2024, Shay retires 20% of these bonds by buying them on the open market at 104½. All interest is accounted for and paid through December 31, 2023, the day before the purchase. The straight-line method is used to amortize any bond discount.
1. How much does the company receive when it issues the bonds on January 1, 2018?

Respuesta :

Answer:

$684,250

Explanation:

The computation of the received amount is shown below:

= Issued amount ÷ face value of bond × issued price

= $700,000 ÷ 100 × $97.75

= $684,250

We assume the face value of bond is 100

The other information which is given in the question is not relevant for the computation part. Hence, we ignored it. Simply we multiply the issued price with the issued shares