On January 1, a company issues bonds dated January 1 with a par value of $280,000. 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 8% and the bonds are sold for $291,365. The journal entry to record the issuance of the bond is:

Debit Cash $280,000; debit Premium on Bonds Payable $11,365; credit Bonds Payable $291,365.

Debit Bonds Payable $280,000; debit Bond Interest Expense $11,365; credit Cash $291,365.

Debit Cash $291,365; credit Premium on Bonds Payable $11,365; credit Bonds Payable $280,000.

Debit Cash $291,365; credit Bonds Payable $291,365.

Debit Cash $291,365; credit Discount on Bonds Payable $11,365; credit Bonds Payable $280,000.

A company issued 6-year, 8% bonds with a par value of $1,050,000. The market rate when the bonds were issued was 7.5%. The company received $1,060,500 cash for the bonds. Using the straight-line method, the amount of recorded interest expense for the first semiannual interest period is:

$41,125.

$42,875.

$84,000.

$83,125.

$42,000.

Clabber Company has bonds outstanding with a par value of $105,000 and a carrying value of $100,300. If the company calls these bonds at a price of $97,500, the gain or loss on retirement is:

$2,800 gain.

$2,800 loss.

$4,700 loss.

$4,700 gain.

$7,500 loss.

On January 1, a company issues bonds dated January 1 with a par value of $390,000. 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 $374,937. The journal entry to record the issuance of the bond is:

Debit Cash $374,937; debit Premium on Bonds Payable $15,063; credit Bonds Payable $390,000.

Debit Cash $374,937; credit Bonds Payable $374,937.

Debit Bonds Payable $390,000; debit Bond Interest Expense $15,063; credit Cash $405,063.

Debit Cash $374,937; debit Discount on Bonds Payable $15,063; credit Bonds Payable $390,000.

Debit Cash $390,000; credit Discount on Bonds Payable $15,063; credit Bonds Payable $374,937.