A Company Sells a Bond with a Face Value of $10,000

question 173

Multiple Choice

A company sells a bond with a face value of $10,000 and receives a premium of $800.Using simplified effective-interest amortization,what journal entry is used to record the issuance of the bonds?

• A)Debit Cash for $10,800 and credit Bonds Payable,Net for $10,800.
• B)Debit Cash for $10,800,credit Bonds Payable,Net for $10,000,and credit Premium on Bond Payable for $800.
• C)Debit Cash for $10,000,debit Interest Expense for $800,credit Bonds Payable,Net for $10,000,and credit Premium on Bonds Payable for $800.
• D)Debit Cash for $10,000,debit Interest Expense for $800,credit Bonds Payable for $10,000,and credit Premium on Bonds Payable for $800.

---

Definitions:

Price War

A competitive strategy in which retailers reduce prices to gain business, often leading to lower profit margins for the competitors.

Mixed Strategy

In game theory, a strategy in which a player randomizes over possible actions, assigning a probability to each.

Nash Equilibrium

A concept in game theory where no player can benefit by changing their strategy while the other players keep theirs unchanged, representing a state of mutual best responses.

Expected Payoff

The anticipated return from an investment, considering all potential outcomes and their probabilities.