McDonald Sales Prepared a Debenture Issue of $20 000 Dated

question 6

Multiple Choice

McDonald Sales prepared a debenture issue of $20 000 dated 1 January 2013. The debentures have a stated rate of 3% and a term of 6 years. The debenture issue was delayed, and the debentures were finally sold on 1 March 2013 at par. The journal entry to record the issue of the debentures on 1 March 2013 will include which of the following?

• A)Credit to Interest payable of $100
• B)Debit to Cash for $20 300
• C)Credit to Debentures payable for $20 100
• D)Credit to Cash for $20 110

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Definitions:

Accounting Equation

The foundational principle of double-entry bookkeeping, stating that assets equal liabilities plus shareholders' equity.

Components

Elements or parts that combine to form a larger product or system.

Net Profit Margin Ratio

A profitability metric that shows the percentage of revenue that remains as net income after all expenses have been deducted.

Net Income

The total earnings of a company after accounting for all expenses and taxes, reflecting the company's profitability.