The Entry to Record the Semiannual Payment and Amortization of the Discount

question 73

Multiple Choice

The entry to record the semiannual payment and amortization of the discount using the straight-line method on a 10%,$100,000,5-year bond issued at 97 would be to:

• A)debit Bond Interest Expense $5,000; credit Cash $5,000.
• B)debit Bond Interest Expense $5,300; credit Cash $5,000; credit Discount on Bonds Payable $300.
• C)debit Bond Interest Expense $10,000; credit Cash $10,000.
• D)debit Bond Interest Expense $13,000; credit Cash $10,000; credit Discount on Bonds Payable $3,000.

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Definitions:

Common Stock

Common stock represents shares in a company that entitle holders to vote at shareholder meetings and receive dividends, typically possessing residual ownership in the company.

Manufacturing Facilities

The physical plants, factories, and machinery used in the process of producing goods.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, leading to the net profit or loss.

Operating Activities

These involve the primary revenue-generating activities of an entity, such as cash flows from selling goods and services.