MC Qu. 154 On January 1, a company issues...

On January 1, a company issues bonds dated January 1 with a par value of $320,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $307,034. The journal entry to record the issuance of the bond is:

Multiple Choice:

Debit Cash $307,034; credit Bonds Payable $307,034.

Debit Bonds Payable $320,000; debit Bond Interest Expense $12,966; credit Cash $332,966.

Debit Cash $307,034; debit Premium on Bonds Payable $12,966; credit Bonds Payable $320,000.

Debit Cash $307,034; debit Discount on Bonds Payable $12,966; credit Bonds Payable $320,000.

Debit Cash $320,000; credit Discount on Bonds Payable $12,966; credit Bonds Payable $307,034.

MC Qu. 155 On January 1, a company issues...

On January 1, a company issues bonds dated January 1 with a par value of $300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 10% and the bonds are sold for $288,413. The journal entry to record the first interest payment using straight-line amortization is:

Multiple Choice:

Debit Interest Expense $14,658.70; credit Premium on Bonds Payable $1,158.70; credit Cash $13,500.00.

Debit Interest Payable $13,500.00; credit Cash $13,500.00.

Debit Interest Expense $12,341.30; debit Discount on Bonds Payable $1,158.70; credit Cash $13,500.00.

Debit Interest Expense $13,500.00; credit Cash $13,500.00.

Debit Interest Expense $14,658.70; credit Discount on Bonds Payable $1,158.70; credit Cash $13,500.00.

MC Qu. 156 On January 1, a company issues...

On January 1, a company issues bonds dated January 1 with a par value of $350,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $335,819. The journal entry to record the first interest payment using the effective interest method of amortization is:

Multiple Choice:

Debit Interest Payable $12,250; credit Cash $12,250.

Debit Interest Expense $11,067; debit Discount on Bonds Payable $1,183; credit Cash $12,250.

Debit Interest Expense $11,067; debit Premium on Bonds Payable $1,183; credit Cash $12,250.

Debit Interest Expense $13,433; credit Premium on Bonds Payable $1,183; credit Cash $12,250.

Debit Interest Expense $13,433; credit Discount on Bonds Payable $1,183; credit Cash $12,250.