Question

Four companies have each issued $4 million in bonds. Which company will have the highest balance in a contra account, assuming this is the first bond issuance for all four companies?

A. Company 2, who sold their bonds at 94
B. Company 4, who sold their bonds at 105
C. Company 1, who sold their bonds at 99
D. Company 3, who sold their bonds at 101

Answer 1

Answer: a) Company 2, who sold their bonds at 94.

Explanation: Since this is the first bond and also, company 2 is the only one selling for the lowest as compared to others. Therefore, company 2 will have the highest balance in a contra account.