MC Qu. 113 On January 1 of Year...

On January 1 of Year 1, Congo Express Airways issued $4,500,000 of 7%, bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $4,050,000 and the market rate of interest for similar bonds is 8%. The bond premium or discount is being amortized using the straight-line method at a rate of $15,000 every 6 months. The life of these bonds is:

Multiple Choice:

27 years

10 years.

15 years.

30 years.

30 years.

MC Qu. 117 On January 1, a company issued...

On January 1, a company issued and sold a $396,000, 7%, 10-year bond payable, and received proceeds of $391,000. 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:

Multiple Choice:

Debit Bond Interest Expense $13,610; debit Discount on Bonds Payable $250; credit Cash $13,860.

Debit Bond Interest Expense $14,110; credit Cash $13,860; credit Discount on Bonds Payable $250.

Debit Bond Interest Expense $13,860; debit Discount on Bonds Payable $250; credit Cash $14,110.

Debit Bond Interest Expense $27,720; credit Cash $27,720.

Debit Bond Interest Expense $13,860; credit Cash $13,860.