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A company receives $200,000 when it issues a bond with a face value of $180,000 and a stated interest rate of 7% paid annually on

A company receives $200,000 when it issues a bond with a face value of $180,000 and a stated interest rate of 7% paid annually on December 31. Which of the following statements is correct?

Selected Answer: C.
The market interest rate must be higher than 7%.

Answers: A.
annual interest payment is $14,000.

B.
The market interest rate must be lower than 7%.

C.
The market interest rate must be higher than 7%.

D.
The entry to record the issuance will include a debit to Bonds Payable for $180,000.

E.
None of these answers is correct.

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