On November 1, 2014, Archangel Services Issued $300,000 of 8-Year

question 124

Multiple Choice

On November 1, 2014, Archangel Services issued $300,000 of 8-year bonds with a stated rate of 9% at par. The bonds make semiannual payments on April 30 and October 31. At December 31, 2014, Archangel made an adjusting entry to accrue interest at year-end. How much Interest Expense will be recorded at December 31, 2014?

• A)$27,000
• B)$4,500
• C)$13,500
• D)$14,200

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Definitions:

Outstanding

An adjective describing something that is still in progress, unsettled, not yet resolved, or in the case of financials, amounts owed that have not yet been paid.

Shares Issued

The total number of shares that a corporation has legally sold to shareholders, including those held by the public and by the company.

Preferred Stock

A class of ownership in a corporation with a higher claim on assets and earnings than common stock, usually with fixed dividends.

Net Income

The total profit or loss of a business after all expenses, including taxes and operating costs, have been deducted from total revenue.