[The Following Information Applies to the Questions Displayed Below

question 135

Multiple Choice

[The following information applies to the questions displayed below.]
Trego Company issued,on December 31,2018,$1,000,000 face value,4%,5-year bonds.Interest will be paid semiannually each June 30 and December 31.The bonds sold at a price of 102;Trego uses the straight-line method of amortizing bond discount or premium.
-The entry made by Trego Company to record issuance of the bonds payable at December 31,2018,includes:

• A)A debit to Cash of $1,000,000.
• B)A credit to Premium on Bonds Payable of $20,000.
• C)A credit to Bonds Payable of $1,020,000.
• D)A credit to Bond Interest Payable of $20,000.

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Definitions:

Post Hoc

Short for the logical fallacy "post hoc ergo propter hoc," meaning "after this, therefore because of this," it implies a mistaken belief that because one thing follows another, it was caused by the other.

Ergo Propter Hoc

A logical fallacy meaning "therefore because of this," implying a cause-and-effect relationship where none exists based solely on sequence of events.

Slope

The measure of the steepness or incline of a line, often calculated as the ratio of the vertical change to the horizontal change between two points on the line.

Equity

Refers to the ownership interest in a corporation in the form of common or preferred stock; it represents the owners' share in the company's assets.