The Journal Entry a Company Records for the Payment of Interest

question 102

Multiple Choice

The journal entry a company records for the payment of interest, interest expense, and amortization of bond premium is

• A) debit Interest Expense, credit Cash and Premium on Bonds Payable
• B) debit Interest Expense, credit Cash
• C) debit Interest Expense and Premium on Bonds Payable, credit Cash
• D) debit Interest Expense, credit Interest Payable and Premium on Bonds Payable

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Definitions:

First-In, First-Out

An inventory valuation method where goods first added to inventory are the first ones to be sold.

Equivalent Units

A conceptual unit used in cost accounting to represent the amount of work done on partially completed goods, allowing for the calculation of unit costs.

Finishing Department

A section in a manufacturing process where products are completed, processed further, or refined after initial production stages.

Equivalent Units

A term used in cost accounting to represent a portion of finished goods calculated by combining completed units and partially completed units.