Question
On January 1 of Year 1, Mellie Company issued a $25,000, 12% bond, at face value. Interest is paid annually each January 1, so the
On January 1 of Year 1, Mellie Company issued a $25,000, 12% bond, at face value. Interest is paidannuallyeach January 1, so the first coupon payment was made on January 1 of Year 2. Mellie uses the effective-interest method on its books. The entry related to this bond on December 31 of Year 1 would include which of the following?
a debit to Interest Receivable of $3,000
a credit to Interest Expense of $3,000
a debit to Interest Revenue of $3,000
a credit to Cash of $3,000
a credit to Interest Payable of $3,000
a debit to Cash of $3,000
No entry is necessary on December 31 of Year 1.
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College Accounting Chapters 1-12
Authors: Douglas McQuaig
10th Edition
1439038783, 978-1439038789
