On January 1, 2015, Carter Sales Issued $15,000 in Bonds

question 120

Multiple Choice

On January 1, 2015, Carter Sales issued $15,000 in bonds for $14,700. They were 6-year bonds with a stated rate of 9%, and pay semiannual interest. Carter Sales uses the straight-line method to amortize the Bond Discount. Immediately after issue of the bonds, the ledger balances appeared as follows: After the first interest payment on June 30, 2015, what will be the balance in the Discount Account?

• A)Debit of $275
• B)Debit of $300
• C)Debit of $325
• D)Credit of $25

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Definitions:

Variances From Standard

The differences between actual costs and the standard (expected) costs set by a company for its products or processes.

Finished Goods Account

An accounting ledger where the value of a company's inventory of products that are complete and ready for sale is recorded.

Wage Rate

Wage rate refers to the standardized amount of compensation paid to employees for their labor, either per hour, day, or piece.

Standard Wage Rate

A predetermined rate of pay for a particular job or task, often used in budgeting and cost control to standardize labor costs.