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

question 160

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 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.

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Definitions:

External Equity

The fairness of an employee's compensation as compared to what others in the external job market are receiving for similar work.

Job-Based Pay

A compensation strategy that determines an employee's salary based primarily on the specific job or position they hold.

Competency-Based Pay

Pay based on an employee’s skill level, variety of skills possessed, or increased job knowledge

Hay Profile Method

A job evaluation technique using three factors—knowledge, mental activity, and accountability—to evaluate executive and managerial positions.