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

question 34

Multiple Choice

On January 1,a company issues bonds dated January 1 with a par value of $400,000.The bonds mature in 5 years.The contract rate is 7%,and interest is paid semiannually on June 30 and December 31.The market rate is 8% and the bonds are sold for $383,793.The journal entry to record the second interest payment using the effective interest method of amortization is:

• A)Debit Interest Expense $12,648.28; debit Premium on Bonds Payable $1,351.72; credit Cash $14,000.00.
• B)Debit Interest Payable $14,000.00; credit Cash $14,000.00.
• C)Debit Interest Expense $12,648.28; debit Discount on Bonds Payable $1,351.72; credit Cash $14,000.00.
• D)Debit Interest Expense $15,351.72; credit Discount on Bonds Payable $1,351.72; credit Cash $14,000.00.
• E)Debit Interest Expense $15,405.79; credit Discount on Bonds Payable $1,405.79; credit Cash $14,000.00.

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Definitions:

Capabilities

The ability or qualities necessary to do something effectively; often refers to the capacities of organizations or individuals to achieve their objectives.

Job Enrichment

An effort to motivate employees by enhancing the responsibility, scope, and interest of their jobs.

Behavioural Needs

The requirements that individuals have for personal growth, recognition, and achievement in their personal or work life.

Flextime

A flexible working hours policy allowing employees to adjust their start and end times within agreed limits based on their needs and preferences.