Question: Southstar Electronics, Inc. authorized and issued $ 4 0 , 0 0 0 of 6 % interest - bearing bonds on January 1 . The

Southstar Electronics, Inc. authorized and issued $40,000 of 6% interest-bearing bonds on January 1. The bonds pay cash interest semiannually on June 30 and December 31 and were issued to yield 7%. The bonds mature in three years on December 31, and the company amortizes any bond discounts and premiums using the effective interest method.
a) Were the bonds issued at face value, discount, or premium?

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