Texxon Corporation issued $200,000 of 10-year bonds with a payment rate of 6%; payments are made semiannually. Assume that the market interest rate for similar investments is 4%, compounded semiannually.

5. What is the carrying value of the bonds after the first semi-annual interest payment date (i.e., what amount of debt will be left)?

a. $231,360.12

b. $198.423.88

c. $234,768.90

d. $196,792.36

6. The journal entry that would be made to record the issue of these bonds would include:

a. a debit to Cash for $134,600

b. a credit to Bonds Payable for $200,000

c. a credit to Premium on Bonds Payable for $98,106

d. a credit to Cash for $232,706

7. The journal entry that would be made when the first payment is made to the bondholders would include:

a. a debit to Premium on Bonds Payable for $6,000

b. a debit to Cash for $4,000

c. a debit to Interest Expense for $4,654.12

d. a debit to Discount on Bonds Payable for $1,345.88

8. The journal entry that would be made when the final payment of $200,000 is made to the bondholders would include:

a. debit Interest Expense for $4,000

b. debit Bonds Payable for $200,000

c. credit Cash for $232,706

d. debit Premium on Bonds Payable for $32,706