On January 2,2014,Mahoney Sales Issued $10,000 in Bonds for $10,900

question 129

Multiple Choice

On January 2,2014,Mahoney Sales issued $10,000 in bonds for $10,900.They were 5-year bonds with a stated rate of 4%,and pay semiannual interest payments.Mahoney Sales uses the straight-line method to amortize the bond premium.On June 30,2014,when Mahoney makes the first payment to bondholders,how much will they report as interest expense?

• A) $110
• B) $450
• C) $90
• D) $290

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Definitions:

Process Costing

A costing method used in industries where production is continuous and homogeneous, assigning costs to masses of similar units.

Direct Labor

The wages and salaries paid to workers directly involved in the production of goods or provision of services.

Individual Units

Individual Units refers to discrete or separate items, especially in contexts where products, housing, or inventory are considered on a per-unit basis.

Process Costing Systems

A costing method used in manufacturing where costs are assigned to processes or departments for mass-produced goods.