The Amazing Widget Company Issues $500,000 of 6%,10-Year Bonds at 103

question 14

Multiple Choice

The Amazing Widget Company issues $500,000 of 6%,10-year bonds at 103 on March 31,2014.The bond pays interest on March 31 and September 30.The market rate of interest on the issuance date was 4%.Assume the company uses the straight-line method for amortization.The journal entry to record the first interest payment on September 30,2014 is a:

• A) debit to Cash for $15,000.
• B) debit to Interest expense for $15,750.
• C) debit to Interest expense for $14,250.
• D) credit to Premium on bonds payable for $750.