Texxon Corporation issued $500,000 of 8%, 10-year bonds. Interest is paid semiannually. Assume that the market rate for similar investments is 6 percent.

5. What is the carrying value of the bonds after the first semi-annual interest payment date?

a. $571,776.20

b. $572,676.50

c. $570,813.00

d. $573,049.20

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

a. a credit to cash for $500,000

b. a debit to Bonds Payable for $500,000

c. a credit to Premium on Bonds Payable for $74,540

d. a credit to Premium on Bonds Payable for $68,720

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

a. a debit to Cash for $20,000.00

b. a credit to Discount on Bonds Payable for $2,763.80

c. a debit to Interest Expense for $17,236.20

d. a debit to Bonds Payable for $20,000.00

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

a. a debit to Premium on Bonds Payable for $68,720

b. a debit to Bonds Payable for $500,000

c. a debit to Cash for $500,000

d. a credit to Premium on Bonds Payable for $20,000