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17 November, 18:08

A discount on bonds payable: a. Occurs when a company issues bonds with a contract rate less than the market rate. b. Occurs when a company issues bonds with a contract rate more than the market rate. c. Increases the Bond Payable account. d. Decreases the total bond interest expense.

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  1. 17 November, 18:10
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    a. Occurs when a company issues bonds with a contract rate less than the market rate

    Explanation:

    Premium on bonds payable - occurs when a company issues bonds for an amount greater than their face or maturity amount. This causes the bonds to have a contract interest rate that is higher than the market interest rate for similar bonds.

    Discount on bonds payable - occurs when a company issues bonds for an amount lesser than their face or maturity amount. This causes the bonds to have a contract interest rate that is lesser than the market interest rate for similar bonds.
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