Question

On December 31, IOU Corporation issued $100,000 of 10-year, 8% bonds at 98. The bonds pay interest annually on December 31. How much cash did IOU Corporation receive when the bonds were issued? Select one: a. $108,000 b. $784,000 C $100,000 d. $98,000 5- 6- Items that are both unusual in nature and infrequent in occurrence are considered Select one: a. items of other revenues and expenses b. discontinued operations C. extraordinary items d. changes in continuing operations

Answer 1

Answer (1)

Option (d) is the correct answer.

Cash received by issue of bonds = $100,000*98%

                                              =$98,000

Answer (2)

Option (c) Extraordinary Item is the correct answer.

Extraordinary Item consisted of gains or losses from events that were unusual and infrequent in nature. These item usually explained further in the notes to the financial statements.