Bonds issued at a premium Will decrease the interest expense of the company Mean

Question

Bonds issued at a premium Will decrease the interest expense of the company Means the bond sold at a gain Are more attractive to investors than a bond sold at face value Will be redeemed before the maturity date
Bonds issued at a premium Will decrease the interest expense of the company Means the bond sold at a gain Are more attractive to investors than a bond sold at face value Will be redeemed before the maturity date
Will decrease the interest expense of the company Means the bond sold at a gain Are more attractive to investors than a bond sold at face value Will be redeemed before the maturity date

Explanation / Answer

BOND ISSUED AT A PREMIUM WILL DECEREASE THE INTEREST EXPENSES OF THE COMPANY

BECAUSE THE BOND PREMIUM RECEIVED AT THE TIME OF ISSUE OF BOND WILL GET SET OFF AGAINST THE INTEREST EXPENSES.

INTEREST EXPENSES A/C.....................................DR XXXX

BOND PREMIUM A/C..............................................DR XXXX

   TO CASH XXXX

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