Question
On January 1, Soren Enterprises issued 15-year bonds with a face value of $200,000. The bonds carry a contract interest rate of 8 percent, and
On January 1, Soren Enterprises issued 15-year bonds with a face value of $200,000. The bonds carry a contract interest rate of 8 percent, and interest is paid semi-annually. On the issue date, the annual market interest rate for bonds issued by companies with similar riskiness was 10 percent. The issuance price of the bonds was $169,255. Which ONE of the following would be included in the journal entry necessary on the books of the bond issuer to record theSECOND interest payment on December 31 of Year 1? Use effective-interest amortization of the bond discount.
DEBIT to Interest Expense of $8,000.00 | ||
DEBIT to Discount on Bonds Payable of $485.89 | ||
DEBIT to Discount on Bonds Payable of $462.75
| ||
CREDIT to Interest Expense of $8,000.00
| ||
CREDIT to Discount on Bonds Payable of $485.89 | ||
CREDIT to Discount on Bonds Payable of $462.75 |
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