SoFlo Company approves $1,000,000 of Bonds to be sold over the next 4 months. The Bond issue provides: Face Value $1,000,000 (100 Bonds at $10,000 each Bond) Face Interest Rate 5% Term 20 Years Interest Paid Semi-Annually On March 01, 2XX1, prior to the sale of the Bonds, the Market Interest Rate falls to 4% All Bonds are sold for Cash on March 02, 2XX1 a Which statement below MUST be TRUE? NOTE: the calclautions have been provided... there is one TRUE answer Cash received is $1,000,000 DEBIT: Cash $1,000,000 CREDIT: Bonds Payable $1,000,000 b. Cash received is $1.137.221 The Market Interest rate is lower than the Face Interest Rate, therefore, the Bonds will sell at a Premium DEBIT: Cash $1,137,221 CREDIT: Premium on Bonds Payable $137,221 CREDIT: Bonds Payable $1,000,000 c. The Bonds cannot be sold until the Market Rato equals the Face Interest Rate This is in compliance with Financial Accounting Standards (GAAP-US) d. Cash received is $883.832 The Market Interest rate is higher than the Face Interest Rate, therefore the Bonds will sell at a Discount DEBIT: Cash $883,832 DEBIT: Discount of Bonds Payable $116,168 CREDIT: Bonds Payable $1,000,000