Question
Orange Corp. is in need of cash. It issues bonds with a $500,000 face value. The bonds have a 5% coupon rate. The market rate
Orange Corp. is in need of cash. It issues bonds with a $500,000 face value. The bonds have a 5% coupon rate. The market rate is 5%. The bonds have a life of 5 years, and are compounded semiannually. Orange Corp. issues the bonds on 1/1/2022.
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What is the journal entry at Orange Corp. will record upon issuance?
Question 1 options:
| Dr. Cash $500,000 Cr. Bonds Payable $500,000 |
| Dr. Cash $500,000 Cr. Interest Expense $500,000 |
| Dr. Interest Expense $500,000 Cr. Bonds Payable $500,000 |
| Dr. Bonds Payable $500,000 Cr. Cash $500,000 |
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