Hornbeck Company Issued $100,000 Bonds Payable with a 7% Interest

question 24

Multiple Choice

Hornbeck Company issued $100,000 bonds payable with a 7% interest rate at a price of 97. The journal entry to record the issue of the bond includes:

• A)a debit to Bonds Payable $100,000.
• B)a debit to Discount on Bonds Payable, $3,000.
• C)a credit to Cash, $97,000.
• D)all of the above.

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Definitions:

Retained Earnings

Profits that a company has earned to date, less any dividends or other distributions paid to shareholders.

Total Assets

The sum of all current and non-current assets owned by a company, indicating its overall value.

Sales/Total Assets

A financial ratio that measures how efficiently a company is using its assets to generate sales.

Pretax Profit

Earnings before tax, indicating the profitability of a business before accounting for tax obligations.