A Company Issued 8%,15-Year Bonds with a Par Value of $550,000

question 147

Multiple Choice

A company issued 8%,15-year bonds with a par value of $550,000 that pay interest semiannually.The market rate on the date of issuance was 8%.The journal entry to record each semiannual interest payment is:

• A)Debit Bond Interest Expense $22,000; credit Cash $22,000.
• B)Debit Bond Interest Expense $44,000; credit Cash $44,000.
• C)Debit Bond Interest Payable $22,000; credit Cash $22,000.
• D)Debit Bond Interest Expense $550,000; credit Cash $550,000.
• E)No entry is needed,since no interest is paid until the bond is due.