Question

On January 1, 2020, Bridgeport Corp issued $3,680,000 of 10-year, 8% convertible debentures at 102. What is the total face value of the debentures issued?

a) $3,680,000
b) $3,762,400
c) $3,764,800
d) $3,760,000

Answer 1

The total face value of the debentures issued by Bridgeport Corp is $3,680,000, as the face value is independent of the issuance price above par. The correct option is A.

Step-by-step explanation:

The question concerns the calculation of the total face value of convertible debentures issued by a corporation. Given that Bridgeport Corp issued convertible debentures at a price above par (102%), the total face value is simply the amount they issued, which is not affected by the price. Therefore, the total face value of the debentures issued is:

• $3,680,000

Options provided for the face value are a distraction, as the face value is the nominal value of the debentures, not their issuance price multiplied by any premium or discount.