Adonis Corporation issued 10year 7 bonds with a par value of

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

Solution

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.