On January 1,2019,Castle Services Issued $169,000 of Six-Year,12% Bonds When $$\begin{array} { | c | l | l | } \hline \text { Interest Expense } & 2295 & \\\hline \text { Cash } & & 2295 \\\hline\end{array}$$

question 48

Multiple Choice

On January 1,2019,Castle Services issued $169,000 of six-year,12% bonds when the market interest rate was 11%.The bonds were issued for $172,000.Castle uses the effective-interest method to amortize the bond premium.Semiannual interest payments are made on June 30 and December 31 of each year.Which of the following is the correct journal entry to record the first interest payment? (Round your answers to the nearest dollar number.)

• A) \[\begin{array} { | c | l | l | }
• \hline \text { Interest Expense } & 2295 & \\
• \hline \text { Cash } & & 2295 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | l | l | }
• \hline \text { Interest Expense } & 2295 & \\
• \hline \text { Discount on Bonds Payable } & 345 & \\
• \hline \text { Cash } & & 10,140 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | l | l | }
• \hline \text { Interest Expense } & 9460 & \\
• \hline \text { Premium on Bonds Payable } & 680 & \\
• \hline \text { Cash } & & 10,140 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | l | l | }
• \hline \text { Cash } & 10,140 & \\
• \hline \text { Premium on Bonds Payable } & & 345 \\
• \hline \text { Interest Expense } & & 9295 \\
• \hline
• \end{array}\]

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Definitions:

Voluntary Responses

Actions that are under conscious control, often in contrast to reflexive or automatic responses.

Unconditioned Response

A natural, automatic reaction to a stimulus that occurs without the need for learning.

Classical Conditioning

An educational method where pairing two stimuli repeatedly results in a response initially triggered by the second stimulus becoming triggered by the first stimulus alone.

Pavlov

Renowned for his work in classical conditioning, signifying the learning process through which a neutral stimulus becomes associated with a meaningful stimulus.