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

question 135

Multiple Choice

On January 1,a company issues bonds dated January 1 with a par value of $400,000.The bonds mature in 5 years.The contract rate is 7%,and interest is paid semiannually on June 30 and December 31.The market rate is 8% and the bonds are sold for $383,793.The journal entry to record the first interest payment using straight-line amortization is:

• A)Debit Interest Payable $14,000.00;credit Cash $14,000.00.
• B)Debit Interest Expense $14,000.00;credit Cash $14,000.00.
• C)Debit Interest Expense $15,620.70;credit Discount on Bonds Payable $1,620.70;credit Cash $14,000.00.
• D)Debit Interest Expense $12,379.30;debit Discount on Bonds Payable $1,620.70;credit Cash $14,000.00.
• E)Debit Interest Expense $15,620.70;credit Premium on Bonds Payable $1,620.70;credit Cash $14,000.00.

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Definitions:

RAM

Random Access Memory, a type of computer memory that can be accessed randomly, any byte of memory can be accessed without touching the preceding bytes.

Temporary

Pertaining to a limited period of time, not permanent.

Volatile

Referring to substances that easily evaporate at normal temperatures or, in financial markets, to investments subject to rapid and unpredictable changes in value.

Supercomputers

High-performance computing systems that are among the fastest and most powerful at any given time, used for complex simulations, data analysis, and scientific research.