A Company Issued 8%,15-Year Bonds with a Par Value of $550,000

question 147

Multiple Choice

A company issued 8%,15-year bonds with a par value of $550,000 that pay interest semiannually.The market rate on the date of issuance was 8%.The journal entry to record each semiannual interest payment is:

• A)Debit Bond Interest Expense $22,000; credit Cash $22,000.
• B)Debit Bond Interest Expense $44,000; credit Cash $44,000.
• C)Debit Bond Interest Payable $22,000; credit Cash $22,000.
• D)Debit Bond Interest Expense $550,000; credit Cash $550,000.
• E)No entry is needed,since no interest is paid until the bond is due.

---

Definitions:

Indifference Analysis

A microeconomic tool used to analyze consumer preferences indicating combinations of goods among which the consumer is indifferent, showing levels of utility.

Numerically Measurable

Quantifiable or capable of being expressed or measured in numerical terms.

Indifference Curve

A graph showing different bundles of goods between which a consumer is indifferent, indicating the combinations provide the same level of utility to the consumer.

Total Utility

The total satisfaction received from consuming a certain quantity of goods or services.