On January 1, a Company Issues Bonds Dated January 1

question 27

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

---

Definitions:

Personnel Psychology

A subfield of psychology that focuses on the study of human behavior in the workplace, including aspects such as hiring, training, and employee productivity.

Assessment Tools

Instruments or techniques used to evaluate and measure cognitive, emotional, behavioral, or physical functioning in individuals.

Personal Unfulfilling

A subjective feeling of lacking fulfillment or satisfaction in personal achievements or life situations.

Csikszentmihalyi

Csikszentmihalyi is a psychologist best known for his concept of flow, a mental state of deep immersion and engagement in activities.