On January 1, Trenni Company issued 12-year $40,000 bonds with a stated rate of 7% for $43,396. The bonds pay interest each June 30 and December 31. The bonds were sold to yield 6%. The journal entry on June 30 of Year 1 contains

a. A credit to Cash for 40,000 x .03.

b. A debit to Premium on bonds payable of (40,000 x .035) (43,396 x .03).

c. A credit to Interest payable of 40,000 x .035.

d. Interest expense of 43,396 x .035.

On January 1, DJ Company issued 10-year $150,000 bonds with a stated rate of 3.5% for $143,869. The bonds pay interest semiannually on June 30 and December 31. The effective rate for the bonds was 4%. The journal entry on June 30 of Year 1 contains

a. A credit to Interest payable of 150,000 x .035/2.

b. Interest expense of 143,869 x .02.

c. A debit to Discount on bonds payable of (150,000 x .02) (143,869 x .035/2).

d. A credit to Cash for 150,000 x .035.

On January 1, Tom Company issued a 4-year $28,000 noninterest-bearing note for $23,044. The implicit rate is 5%. On December 31 of Year 1 there is

a. Cash paid of 28,000 x .05.

b. Interest expense of 28,000 x .05.

c. Interest expense of 23,044 x .05.

d. Cash paid of 12,594 x .06

According to US GAAP, convertible bonds must be recorded at the value of

a. Debt only.

b. Debt plus the value of the conversion feature

c. Debt minus the value of the conversion shares

d. The debts face value.