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

question 24

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. On June 30, 2015, when Carter makes the first payment to bondholders, how much will they report as Interest Expense?

• A)$675
• B)$700
• C)$25
• D)$825

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Definitions:

Stock Dividend

A distribution of extra shares to shareholders, as opposed to a cash payment, as a form of dividend.

Common Stock

A type of equity security that represents ownership in a corporation, usually carrying voting rights and potential dividends.

Consolidation Process

The procedure of combining the financial statements of two or more entities into one, usually for a parent company and its subsidiaries.

Outstanding Bonds

Bonds issued by a company or government that are currently held by investors and have not yet matured or been redeemed.