A Company Issued $100,000 of 10% Bonds on January 1

question 104

Multiple Choice

A company issued $100,000 of 10% bonds on January 1. The bonds pay interest semiannually on January 1 and July 1. The company has a fiscal year end of May 31. On May 31, the company will:

• A)make a journal entry to accrue interest expense from January 1 through July 1.
• B)make a journal entry to accrue interest expense from January 1 through May 31.
• C)make a journal entry to accrue interest expense from July 1 through December 31.
• D)not need to make a journal entry on May 31.

---

Definitions:

Direct Labor Hours

The total amount of time workers spend directly manufacturing a product or providing a service.

Mix Variance

Captures the effect of substitution among the products, holding constant the number of units sold.

Direct Labor

The cost associated with employees who are directly involved in the production of goods or services.

Direct Labor Efficiency Variance

A measure used in cost accounting to evaluate the difference between the actual hours worked and the standard hours expected for the production achieved.