On January 1,a Company Issues Bonds Dated January 1 with a Par

question 118

Multiple Choice

On January 1,a company issues bonds dated January 1 with a par value of $300,000.The bonds mature in 5 years.The contract rate is 9%,and interest is paid semiannually on June 30 and December 31.The market rate is 8% and the bonds are sold for $312,177.
-The journal entry to record the first interest payment using the effective interest method of amortization is:

• A)Debit Bond Interest Expense $12,487.08; debit Premium on Bonds Payable $1,012.92; credit Cash $13,500.00.
• B)Debit Interest Payable $13,500; credit Cash $13,500.00.
• C)Debit Bond Interest Expense $12,487.08; debit Discount on Bonds Payable $1,012.92; credit Cash $13,500.00.
• D)Debit Bond Interest Expense $14,717.70; credit Premium on Bonds Payable $1,217.70; credit Cash $13,500.00.
• E)Debit Bond Interest Expense $12,282.30; debit Premium on Bonds Payable $1,217.70; credit Cash $13,500.00.

---

Definitions:

Ethnic Groups

Communities or populations sharing a common culture, ancestry, language, or social experiences.

Bureaucratic Innovations

New methods or improvements introduced within administrative and organizational structures to enhance efficiency and productivity.

Productivity

Refers to the amount of goods or services produced for every hour worked.

Quality Circles

Groups of workers who voluntarily come together to solve problems and improve work processes and quality in their organization.