Question
On January 1, a company issued and sold a $406,000, 7%, 10-year bond payable, and received proceeds of $401,000. Interest is payable each June 30
On January 1, a company issued and sold a $406,000, 7%, 10-year bond payable, and received proceeds of $401,000. 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 $13,960; debit Discount on Bonds Payable $250; credit Cash $14,210.
b. Debit Bond Interest Expense $14,210; debit Discount on Bonds Payable $250; credit Cash $14,460.
c. Debit Bond Interest Expense $14,210; credit Cash $14,210.
d. Debit Bond Interest Expense $28,420; credit Cash $28,420.
e. Debit Bond Interest Expense $14,460; credit Cash $14,210; credit Discount on Bonds Payable $250.
Please show the work used to find answer.
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