On 1 November 2015, Archangel Services Issued $200 000 of 10-

question 73

Multiple Choice

On 1 November 2015, Archangel Services issued $200 000 of 10- year debentures with a stated rate of 3%. The debentures were sold at par, and make half- yearly payments on 30 April and 31 October. At 31 December 2015, Archangel made an adjusting entry to accrue interest at year- end. No further entries were made until 30 April 2016, when the first payment was sent out. At that time, how much interest expense was recorded for the period of January to April 2016?

• A)$2 000
• B)$6 000
• C)$3 000
• D)$1 000

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Definitions:

Past Practice

A term used in labor relations to refer to a customary practice that, over time, has become an accepted way of doing things despite not being formally written into a contract.

Arbitrators

Neutral third parties chosen to settle disputes outside of court, whose decisions are typically binding.

Arbitration Case

A legal dispute that is resolved outside of court by an arbitrator, whose decision is typically binding on both parties.

Turnover

The rate at which employees leave a business and are replaced by new employees, which can affect organizational performance and continuity.