A Company Sells a Bond with a Face Value of $10,000

question 83

Multiple Choice

A company sells a bond with a face value of $10,000 and receives a premium of $800.Using the Simplified Approach (Effective-interest Method) ,the company would make the following journal entry:

• A)Debit Cash for $10,800 and credit Bonds Payable,Net for $10,800.
• B)Debit Cash for $10,800,credit Bonds Payable,net for $10,000,and credit Premium on Bond Payable for $800.
• C)Debit Cash for $10,000,debit Interest Expense for $800,credit Bonds Payable,net for $10,000,and credit Premium on Bonds Payable for $800.
• D)Debit Cash for $10,000,debit Interest Expense for $800,credit Bonds Payable for $10,000 and credit Premium on Bonds Payable for $800.

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Definitions:

Services from Land

The benefits and outputs produced by natural resources without altering their original physical state, such as agricultural production, mining, and scenic views.

Ownership

Refers to the rights that confirm the legal possession and control over property, assets, or resources.

Marginal Product of Labor

The additional output a firm gains from employing one more unit of labor, holding all other inputs constant.

Value of Marginal Product

The additional revenue generated by employing one more unit of a factor of production, keeping other factors constant.