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

question 90

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. Assume that the company uses the straight-line method for amortization. The journal entry to record the first interest payment on September 30, 2014 is a:

• A)debit to Cash for $15,000.
• B)debit to Interest Expense for $15,750.
• C)debit to Interest Expense for $14,250.
• D)credit to Premium on Bonds Payable for $750.

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Definitions:

Omitted

Left out or excluded, either deliberately or unintentionally.

Permanent Change

An alteration or modification that is lasting and not reversible.

Learning

A process that involves acquiring knowledge, behaviors, skills, values, or preferences through study, experience, or teaching.

Generalization

In psychology, generalization is the process by which an organism responds in the same way to different but similar stimuli.