On January 1,your Company Issues a 5-Year Bond with a Face

question 141

Multiple Choice

On January 1,your company issues a 5-year bond with a face value of $10,000 and a stated interest rate of 7%.The market interest rate is 5%.The issue price of the bond was $10,866.Your company used the effective-interest method of amortization.At the end of the first year,your company should:

• A) debit Interest Expense for $543, debit Premium on Bonds Payable for $157, and credit Interest Payable for $700.
• B) debit Interest Expense for $700, credit Premium on Bonds Payable for $157, and credit Interest Payable for $543.
• C) debit Interest Expense for $700, debit Premium on Bonds Payable for $157, and credit Interest Payable for $543.
• D) debit Interest Expense for $543 and credit Interest Payable for $543.

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Definitions:

Occupational Training

Education or training programs aimed at providing individuals with the skills needed for entering or advancing in specific occupations.

Severe Mental Disorders

Mental health conditions that significantly impair an individual's ability to function in daily life, often requiring long-term treatment and support.

Thorazine

Thorazine, known chemically as chlorpromazine, is an antipsychotic medication used to treat several mental health disorders.

Haldol

A medication commonly used to treat psychotic disorders, known generically as haloperidol.