1. The journal entry a company records for the issuance of bonds when the contract rate and the market rate are the same is

a. debit Bonds Payable, credit Cash.

b. debit Cash, credit Premium on Bonds Payable and Bonds Payable.

c. debit Cash, credit Bonds Payable.

d. debit Cash and Discount on Bonds Payable, credit Bonds Payable.

2.

If bonds payable are not callable, the issuing corporation

a. can repurchase them in the open market.

b. can exchange it for common stock.

c. is more likely to repurchase them if the interest rates increase.

d. must get special permission from the SEC to repurchase them.