Kenton Corporation Issued $556,000 of 30-Year,8 Percent Bonds at 106

question 59

Multiple Choice

Kenton Corporation issued $556,000 of 30-year,8 percent bonds at 106 on one of its semi-annual interest dates.The straight-line method of amortization is to be used.The entry to record the bond interest expense on the next interest payment date is:

• A) Bond Interest Expense 22,240
• Cash 22,240
• B) Bond Interest Expense 43,368
• Unamortized Bond Premium 1,112
• Cash 44,480
• C) Bond Interest Expense 21,040
• Cash 21,040
• D) Bond Interest Expense 21,684
• Unamortized Bond Premium 556
• Cash 22,240

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Definitions:

Fraud

A wrongful statement, action, or concealment pertinent to the subject matter of a contract knowingly made to damage the other party.

Record of Transactions

A detailed log or document that keeps track of all the transactions made within a certain period.

Market Value

The estimated amount for which a property or asset would exchange on the date of valuation between a willing buyer and a willing seller.

Destroyed by Fire

The state of being damaged or annihilated as a result of combustion or intense heat.