31 - 34. Kelly Industries needs to raise capital for expansion purposes. Management is considering issuing $1,000,000 of 7.5% 20-year bonds dated June 1, 20X1 with interest payment dates of December 1 and June 1. Kellys year-end is December 31. The entry to record the issuance of the bonds on June 1, 20X1 at 96 includes a

A. debit to cash for $1,000,000

B. debit to discount for $35,000

C. debit to bonds payable for $965,000

D. credit to interest payable for $37,500

E. credit to cash for $965,000

32. (connected to the question above) Kelly Industries needs to raise capital for expansion purposes. Management is considering issuing $1,000,000 of 7.5% 20-year bonds dated June 1, 20X1 with interest payment dates of December 1 and June 1. Kellys year-end is December 31. The entry to record the issuance of the bonds at face value plus accreued interest on October 1, 20X1 includes a A. credit to bonds payable for $1,000,000

B. credit to interest payable for $37,500

C. credit to cash for $975,000

D. debit to cash for $1,000,000

E. debit to interest expense for $37,500

33. (connected to the questions above)Kelly Industries needs to raise capital for expansion purposes. Management is considering issuing $1,000,000 of 7.5% 20-year bonds dated June 1, 20X1 with interest payment dates of December 1 and June 1. Kellys year-end is December 31. Assuming the bonds were issued on June 1, 20X1 at 93 5/8 and the company uses the straight-line method of amortization, the semiannual interest payment on December 1, 20X1 would include a

A. credit to interest expense for $39,093.75

B. credit to discount for $3,187.50

C. credit to discount for $1,593.75

D. credit to cash for $75,000.00

E. credit to bonds payable for $936,250.00

34. (connected to the questions above)Kelly Industries needs to raise capital for expansion purposes. Management is considering issuing $1,000,000 of 7.5% 20-year bonds dated June 1, 20X1 with interest payment dates of December 1 and June 1. Kellys year-end is December 31. Assuming the bonds were issued on June 1, 20X1 at 104 7/8 and the company used the straight-line method of amortization, the semiannual interest payment entry on December 1, 20X1 would include a

A. credit to cash for $37,500.00

B. credit to interest expense for $36,281.25

C. credit to discount for $203.13

D. credit to interest expense for $38,718.75

E. credit to premium for $1,218.75