Question

Tano Company issues bonds with a par value of $81,000 on January 1, 2019. The bonds' annual contract rate is 6%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 8%, and the bonds are sold for $76,753. 1. What is the amount of the discount on these bonds at issuance?

Answer 1

The amount of the discount on these bonds at issuance is $4,247.

Step-by-step explanation:

The discount on the bonds at issuance can be calculated by finding the difference between the par value of the bonds and the amount they were sold for. In this case, the par value is $81,000, and the bonds were sold for $76,753. Therefore, the discount on these bonds at issuance is $81,000 - $76,753 = $4,247.

Answer 2

The discount on the Tano Company bonds at issuance is $4,247, calculated as the difference between the par value of $81,000 and the selling price of $76,753.

Step-by-step explanation:

The discount on bonds is the difference between the par value and the price at which the bonds are sold. In this case, Tano Company issued bonds with a par value of $81,000, but they sold the bonds for $76,753. Therefore, the amount of the discount on these bonds at issuance is the difference between these two amounts.

To calculate the discount, you subtract the selling price from the par value: $81,000 - $76,753 = $4,247. So, the bonds were issued at a discount of $4,247.