Table $4$

Browning Enterprises is considering alternative ways of raising

capital for the purchase of a new plant. One alternative

suggested by the controller is the issuance of bonds. After

discussions with an underwriter, Browning decides to issue

$$3,000,000$ of $6\mathrm{.}4\%,10-$year bonds dated May $1,20x6,$ with

interest payment dates of November $1$ and May $1.$ Browning's

year$-$end is December $31.$ Browning uses the effective$-$interest

method of amortization.

Refer to Table $4.$ Assume the bonds were issued on May $1,20$X$6,$

at $89$ when the market interest rate was $8\%,$ and the company

uses the effective$-$interest method of amortization. The December

$31,20$X$6,$ adjusting entry to accrue interest and record applicable

amortization would include a

credit to premium on bonds payable for $$11,232$

debit to interest expense for $$32,000$

debit to bonds payable for $$28,256$

credit to discount on bonds payable for $$3,744$