Question

Buchanan Company issued 10-year bonds with a par value of $800,000 on January 1, 2014, at 97% of par. The annual interest rate is 10%, payable semiannually on January 1 and July 1. What is the total par value of the bonds issued?

A. $760,000
B. $800,000
C. $776,000
D. $820,000

Answer 1

The total par value of the bonds issued by Buchanan Company is the original face value of the bonds, which is $800,000, irrespective of the issuance price.

Step-by-step explanation:

The total par value of the bonds issued by Buchanan Company is the face value of the bonds, which is the amount the issuer agrees to pay back at maturity. Since the bonds have not matured yet, regardless of the issuance price which is at 97% of par, the total par value remains the original face value. Therefore, the correct answer is B. $800,000.