On February 1, Year 1, Centra Issues $100,000 Semi-Annual 12

question 2

Multiple Choice

On February 1, Year 1, Centra issues $100,000 semi-annual 12% bonds at par plus accrued interest.The interest is payable on July 1 and January 1 of each year.What entry is necessary to record the issuance of the bonds on February 1?

• A)Cash 100,000
• Bonds Payable 100,000
• B)Cash 101,000
• Bonds Payable 101,000
• C)Cash 100,000
• Interest Payable 1,000
• Bonds Payable 101,000
• D)Cash 101,000
• Bonds Payable 100,000
• Interest Payable 1,000
• E)none of the above

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Definitions:

Buyers and Sellers

The participants in a market who respectively purchase and offer goods or services for trade.

Substitution Effects

The change in the consumption pattern of goods due to a change in their prices, making consumers replace more expensive items with cheaper alternatives.

Downward-sloping

A descriptor often used for demand curves, indicating that as the price of a good or service decreases, the quantity demanded increases.

Law of Demand

The principle that there is an inverse relationship between the price of a good and the quantity demanded, holding other factors constant.