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

question 123

Multiple Choice

On January 1,a company issues bonds dated January 1 with a par value of $600,000.The bonds mature in 3 years.The contract rate is 7%,and interest is paid semiannually on June 30 and December 31.The bonds are sold for $564,000.The journal entry to record the first interest payment using straight-line amortization is:

• A)Debit Interest Payable $21,000; credit Cash $21,000.
• B)Debit Interest Expense $21,000; credit Cash $21,000.
• C)Debit Interest Expense $27,000; credit Discount on Bonds Payable $6,000; credit Cash $21,000.
• D)Debit Interest Expense $15,000; debit Discount on Bonds Payable $6,000; credit Cash $21,000.
• E)Debit Interest Expense $21,000; credit Premium on Bonds Payable $6,000; credit Cash $15,000.

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Definitions:

Evidence

Information or details that support a statement, theory, or finding, making it more credible or comprehensible.

Counterproposal

A proposal made in response to a previous one, typically with changes to terms or conditions.

Eliminate Need

The process of removing or reducing a requirement or necessity for something.

State Refusal

The act of officially or formally declining an offer, proposal, or request.