Question
On January 1, your company issues a 5-year bond with a face value of $10,000 and a stated interest rate of 6%. The market interest
On January 1, your company issues a 5-year bond with a face value of $10,000 and a stated interest rate of 6%. The market interest rate is 4%. The issue price of the bond was $10,890. Your company used the effective-interest method of amortization. At the end of the first year, your company should: Multiple Choice debit Interest Expense for $600, debit Premium on Bonds Payable for $164.00, and credit Interest Payable for $436.00. debit Interest Expense for $436.00, debit Premium on Bonds Payable for $164.00, and credit Cash for $600. debit Interest Expense for $436.00 and credit Interest Payable for $436.00. debit Interest Expense for $600, credit Premium on Bonds Payable for $164.00, and credit Interest Payable for $436.00.
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