On January 1,2014,Partridge Company Issued $50,000 of 6-Year Bonds with a Stated

question 13

Multiple Choice

On January 1,2014,Partridge Company issued $50,000 of 6-year bonds with a stated rate of 3%.The market rate at time of issue was 4%,so the bonds were discounted and sold for $47,331.Partridge uses the effective-interest rate of amortization for bond discount.Semiannual interest payments are made on June 30 and December 31 of each year.Which of the following is the correct journal entry to record the first interest payment? (Please round all amounts to the nearest whole dollar.)

• A) \[\begin{array} { | l | r | r | }
• \hline \text { Interest expense } & 1,000 & \\
• \hline \text { Cash } & & 1,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | r | r | }
• \hline \text { Interest expense } & 947 & \\
• \hline \text { Discount on bonds payable } & & 197 \\
• \hline \text { Cash } & & 750 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | r | r | }
• \hline \text { Interest expense } & 750 & \\
• \hline \text { Discount on bonds payable } & 250 & \\
• \hline \text { Cash } & & 1,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | r | r | }
• \hline \text { Interest expense } & 1,000 & \\
• \hline \text { Discount on bonds payable } & & 750 \\
• \hline \text { Cash } & & 250 \\
• \hline
• \end{array}\]

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Definitions:

Fine

A fine is a monetary penalty imposed by a court or regulatory agency as punishment for an offense or regulation violation.

Corporate Assets

The resources and holdings owned by a corporation, including cash, property, and intellectual property, that contribute to its overall value.

Shareholders

Individuals or entities that own shares in a corporation, representing a portion of the company's ownership.

Looting

In corporation law, the transfer of a corporation’s assets to its managers or controlling shareholders at less than fair value.