Cramer Corp $\begin{array}{lr}\text { Interest Expense } & 900,000 \\\text { Premium on Bonds Payable } & 61,388\\\text { Cash }&961,388\end{array}$

question 146

Multiple Choice

Cramer Corp. issued $20,000,000 of 5-year, 9% bonds at a market (effective) interest rate of 10%, receiving cash of $19,227.757. Interest on the bonds is payable semiannually. What is the entry to record the first semiannual interest payment, and the amortization of the bond discount, using the interest method?

• A)
• \(\begin{array}{lr}
• \text { Interest Expense } & 900,000 \\
• \text { Premium on Bonds Payable } & 61,388\\\text { Cash }&961,388
• \end{array}\)
• B)
• \(\begin{array} { l r }
• \text { Interest Expense } & 961,388 \\
• \quad \text { Discount on Bonds Payable } & 61,388 \\
• \text { Cash } & 900,000
• \end{array}\)
• C)
• \(\begin{array} { l l }
• \text { Bonds Payable } & 961,388\\
• \text { Cash } & 961,388 \\
• \end{array}\)
• D)
• \(\begin{array} { l r r }
• \text { Interest Expense } & 838,612 & \\
• \text { Discount on Bonds Payable } & 61,388 & \\
• \text { Cash } & & 900,000
• \end{array}\)

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