The Entry to Record the Semiannual Payment and Amortization of the Discount

question 94

Multiple Choice

The entry to record the semiannual payment and amortization of the discount using the straight-line method on a 11%, $500,000, 9-year bond issued at 96 would be to:

• A) debit Bond Interest Expense $13,750; credit Cash $13,750.
• B) debit Bond Interest Expense $28,056; credit Cash $27,500; credit Discount on Bonds Payable $556.
• C) debit Bond Interest Expense $28,611; credit Cash $28,611.
• D) debit Bond Interest Expense $28,611; credit Cash $27,500; credit Discount on Bonds Payable $1,111.

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Definitions:

Logrolling

The practice of exchanging favors, especially in politics, by reciprocal voting for each other's proposed legislation.

Private Sector

The part of the economy owned and operated by individuals and corporations for profit, as opposed to being controlled by the government.

Public Sector

The part of the economy composed of both public services and public enterprises, funded and operated by the government.

Inefficient

refers to the suboptimal allocation or use of resources in a way that does not maximize potential output or outcomes.