The Amazing Widget Company Issues $500,000 of 6%,10-Year Bonds at 103

question 27

Multiple Choice

The Amazing Widget Company issues $500,000 of 6%,10-year bonds at 103 on March 31,2014.The bond pays interest on March 31 and September 30.The market rate of interest on the issuance date was 4%.Assume the company uses the straight-line method for amortization.The journal entry to record the issuance would include a:

• A) debit to Cash for $500,000.
• B) credit to Bonds payable for $515,000.
• C) credit to Discount on bonds payable for $15,000.
• D) debit to Cash for $515,000.

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Definitions:

Percentage Fall

A measure of decrease expressed as a proportion of the original quantity.

Crude Quantity Theory

A basic concept in economics that suggests the amount of money in circulation determines the level of economic activity, affecting prices and inflation.

M Rises

An increase in the money supply in an economy, which can affect inflation and interest rates.

Q Falls

Indicates a decrease in the quantity demanded or supplied of a good or service, often in response to changes in price, income, or other factors.