Question

Fernie Manufacturing Inc. has $210,000 of 10% debenture bonds outstanding. The bonds were issued at 109 in 2020 and mature in 2040. How much cash did Fernie receive when it issued these bonds

Answer 1

Fernie Manufacturing Inc. received $228,900 in cash from issuing debenture bonds with a face value of $210,000 at 109% of the par value.

Step-by-step explanation:

Fernie Manufacturing Inc. issued debenture bonds with a face value of $210,000 at 109% of the par value. To calculate the cash Fernie Manufacturing Inc. received upon issuing these bonds, we multiplied the face value by the issuance percent.

Cash Received = Face Value of Bonds × Issuance Percent

= $210,000 × 109%

= $210,000 × 1.09

= $228,900

Therefore, Fernie Manufacturing Inc. received $228,900 when it issued these bonds.