C is corrent. $100,000 of bonds are issued at 103 plus accrued interest (2 months, from January 1 to March 1) less bond issue costs of $5,000. The cash received for the bonds is 103% of $100,000, or $103,000. The cash received for the accrued interest is $1,500 ($100,000 x 9% x 2/12). Therefore, cash receipts total $99,500 ($103,000 + $1,500 – $5,000).
A is incorrect. $100,000 of bonds are issued at 103 plus accrued interest (2 months, from January 1 to March 1) less bond issue costs of $5,000. The cash received for the bonds is 103% of $100,000, or $103,000. The cash received for the accrued interest is $1,500 ($100,000 x 9% x 2/12). Therefore, cash receipts total $99,500 ($103,000 + $1,500 – $5,000).
A is incorrect. $100,000 of bonds are issued at 103 plus accrued interest (2 months, from January 1 to March 1) less bond issue costs of $5,000. The cash received for the bonds is 103% of $100,000, or $103,000. The cash received for the accrued interest is $1,500 ($100,000 x 9% x 2/12). Therefore, cash receipts total $99,500 ($103,000 + $1,500 – $5,000).
D is incorrect. $100,000 of bonds are issued at 103 plus accrued interest (2 months, from January 1 to March 1) less bond issue costs of $5,000. The cash received for the bonds is 103% of $100,000, or $103,000. The cash received for the accrued interest is $1,500 ($100,000 x 9% x 2/12). Therefore, cash receipts total $99,500 ($103,000 + $1,500 – $5,000).
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