Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The ASQ Certified Medical Device Auditor Handbook

Authors: Scott A Laman

4th Edition

1953079962, 978-1953079961

More Books

Students also viewed these Accounting questions

Question

Define Management by exception

Answered: 1 week ago

Question

Explain the importance of staffing in business organisations

Answered: 1 week ago

Question

What are the types of forms of communication ?

Answered: 1 week ago