On January 1,a Company Issues Bonds Dated January 1 with a Par

question 123

Multiple Choice

On January 1,a company issues bonds dated January 1 with a par value of $600,000.The bonds mature in 3 years.The contract rate is 7%,and interest is paid semiannually on June 30 and December 31.The bonds are sold for $564,000.The journal entry to record the first interest payment using straight-line amortization is:

• A)Debit Interest Payable $21,000; credit Cash $21,000.
• B)Debit Interest Expense $21,000; credit Cash $21,000.
• C)Debit Interest Expense $27,000; credit Discount on Bonds Payable $6,000; credit Cash $21,000.
• D)Debit Interest Expense $15,000; debit Discount on Bonds Payable $6,000; credit Cash $21,000.
• E)Debit Interest Expense $21,000; credit Premium on Bonds Payable $6,000; credit Cash $15,000.

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Definitions:

Mental Strategies

Techniques or approaches used to enhance cognitive processes such as memory, problem-solving, and learning.

Preoperational Thinking

A stage in Piaget's theory of cognitive development where children from about 2 to 7 years old develop memory and imagination, but do not yet think logically.

Cognitive Abilities

The mental skills and capacities for learning, reasoning, problem-solving, and processing information.

Theory Of Mind

The ability to attribute mental states—beliefs, intents, desires, emotions, knowledge—to oneself and to others and to understand that others have beliefs, desires, and intentions that are different from one's own.