On January 1,2012,Davie Services Issued $20,000 of 8% Bonds That

question 103

Multiple Choice

On January 1,2012,Davie Services issued $20,000 of 8% bonds that mature in five years.They were sold at discount,for a total of $19,000.On January 1,2017,when the bonds mature,Davie Services will make the final principal payment.That entry will be which of the following?

• A) Debit Bond discount for $1,000 and credit Cash for $1,000.
• B) Debit Bonds payable for $19,000 and credit Cash for $1,000.
• C) Debit Bonds payable for $20,000 and credit Cash for $20,000.
• D) Debit Bonds payable for $19,000, debit Bond discount for $1,000 and credit Cash for $19,000.

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Definitions:

Escrow Account

An escrow account is a financial arrangement where funds or assets are held by a third party on behalf of two other parties in the process of completing a transaction.

Semi-annual

Refers to events or processes that occur or are carried out twice a year.

Mortgage Payment

A regular payment made towards a mortgage loan, typically including both principal and interest components.

Apothem

A line segment that goes through the center of a polygon that is perpendicular to a side.