A Return on equity increases or decreases through bond financing True False B On January 1, a company issued and sold a $400,000, 7 , 10 year bond payable, and received proceeds of $396,000 Interest is payable each June 30 and December 31 The company uses the straight line method to amortize the discount The journal entry to record the first interest payment is a Debit Bond Interest Expense $13,800 debit Discount on Bonds Payable $200 credit Cash $14,000 b Debit Bond Interest Expense $28,000 credit Cash $28,000 c Debit Bond Interest Expense $14,200 credit Cash $14,000 credit Discount on Bonds Payable $200 d Debit Bond Interest Expense $14,000 debit Discount on Bonds Payable $200 credit Cash $14,200 C On January 1, Alpha Corporation issued and sold $400,000, 7 , 10 year bond payable, and received proceeds of $396,000 Interest is paid semiannually The company uses the straight line method to amortize the discount What amount of discount should be amortized every period a $200 b None of the above c $400 d $4,000 D On January 1, a company issued a $501,000, 10 , 8 year bond payable, and received proceeds of $487,000 Interest is payable each June 30 and December 31 The company uses the straight line method to amortize the discount The amount of discount amortized each period is $875 True False

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A-Return on equity increases or decreases through bond financing. True False B-On January 1, a company issued and sold a $400,000, 7%, 10-year bond payable,

A-Return on equity increases or decreases through bond financing.

True

False

B-On January 1, a company issued and sold a $400,000, 7%, 10-year bond payable, and received proceeds of $396,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The journal entry to record the first interest payment is:

	a.	Debit Bond Interest Expense $13,800; debit Discount on Bonds Payable $200; credit Cash $14,000
	b.	Debit Bond Interest Expense $28,000; credit Cash $28,000
	c.	Debit Bond Interest Expense $14,200; credit Cash $14,000; credit Discount on Bonds Payable $200
	d.	Debit Bond Interest Expense $14,000; debit Discount on Bonds Payable $200; credit Cash $14,200

C-On January 1, Alpha Corporation issued and sold $400,000, 7%, 10-year bond payable, and received proceeds of $396,000. Interest is paid semiannually. The company uses the straight-line method to amortize the discount. What amount of discount should be amortized every period?

	a.	$200.
	b.	None of the above.
	c.	$400.
	d.	$4,000.

D-On January 1, a company issued a $501,000, 10%, 8-year bond payable, and received proceeds of $487,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The amount of discount amortized each period is $875.

True

False