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15 September, 15:08

A city's Enterprise Fund issued revenue bonds with a face value of $10,000,000. The bonds were issued with a 2% premium and the issuance costs totaled $150,000. When the bonds are issued, the Enterprise Fund will report total other financing sources in the amount of $0. $9,850,000. $10,000,000. $10,200,000.

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  1. 15 September, 15:26
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    The correct answer is $9,850,000

    Explanation:

    The Enterprise fund which will be reported, total other financing sources of the amount is computed as:

    = Face Value - Cost of issuance

    where

    Face Value is $10,000,000

    Cost of issuance is $150,000

    Putting the values above:

    = $10,000,000 - $150,000

    = $9,850,000

    Note: Premium will not be considered as it is asked for when the bonds are issued.
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