Exhibit 14-10 Hawk Issued $500,000 of Its Ten-Year 5% Bonds for $463,197

question 26

Multiple Choice

Exhibit 14-10
Hawk issued $500,000 of its ten-year 5% bonds for $463,197 on October 1, 2016 so as to yield an effective rate of 6%. Interest is paid each October 1 and April 1
-Refer to Exhibit 14-9. Assuming Hawk uses the effective interest method, the adjusting entry on December 31, 2016, would include

• A) a credit to Premium on Bonds Payable for $502.
• B) a credit to Interest Payable for $4,498.
• C) a credit to Interest Payable for $5,000.
• D) a debit to Interest Expense for $5,498.

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