Question

On January 1, your company issues a 5-year bond with a face value of $10,000 and...

On January 1, your company issues a 5-year bond with a face value of $10,000 and a stated interest rate of 7%. The market interest rate is 5%. The issue price of the bond was $10,866. 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 $543.30, debit Premium on Bonds Payable for $156.70, and credit Interest Payable for $700.

  • debit Interest Expense for $700, credit Premium on Bonds Payable for $156.70, and credit Interest Payable for $543.30.

  • debit Interest Expense for $700, debit Premium on Bonds Payable for $156.70, and credit Interest Payable for $543.30.

  • debit Interest Expense for $543.30 and credit Interest Payable for $543.30.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 1, a company issues bonds dated January 1 with a par value of $570,000....
On January 1, a company issues bonds dated January 1 with a par value of $570,000. The bonds mature in 5 years. The contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The market rate is 9% and the bonds are sold for $547,433. The journal entry to record the second interest paymentusing the effective interest method of amortization is: Multiple Choice Debit Interest Expense $24,717.02; credit Discount on Bonds Payable $1,917.02; credit Cash...
On January 1, a company issues bonds dated January 1 with a par value of $280,000....
On January 1, a company issues bonds dated January 1 with a par value of $280,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $291,365. The journal entry to record the first interest payment using straight-line amortization is: (Rounded to the nearest dollar.) Multiple Choice Debit Interest Payable $12,600; credit Cash $12,600. Debit Bond Interest...
On January 1, a company issues bonds dated January 1 with a par value of $710,000....
On January 1, a company issues bonds dated January 1 with a par value of $710,000. The bonds mature in 3 years. The contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The bonds are sold for $698,000. The journal entry to record the first interest payment using straight-line amortization is: Multiple Choice Debit Interest Expense $30,400; credit Discount on Bonds Payable $2,000; credit Cash $28,400. Debit Interest Expense $28,400; credit Premium on Bonds...
On January 1, a company issues bonds dated January 1 with a par value of $700,000....
On January 1, a company issues bonds dated January 1 with a par value of $700,000. The bonds mature in 3 years. The contract rate is 10%, and interest is paid semiannually on June 30 and December 31. The bonds are sold for $682,000. The journal entry to record the first interest payment using straight-line amortization is: Multiple Choice Debit Interest Expense $35,000; credit Premium on Bonds Payable $3,000; credit Cash $32,000. Debit Interest Expense $38,000; credit Discount on Bonds...
On January 1 20X1, Jude Company issues bonds with a face value of $1,000,000 in exchange...
On January 1 20X1, Jude Company issues bonds with a face value of $1,000,000 in exchange for cash. On that date the market rate is 12%. The bond has a stated rate of 15% and matures in five years. Interest is paid every four months. Which of the following is part of the journal entry that Jude Company records at the date of the bond issuance. CREDIT to Premium on Bond Payable for $110,900 DEBIT to Bond Payable for $1,000,000...
On January 1, Year 1, Hart Company issued bonds with a face value of $130,000, a...
On January 1, Year 1, Hart Company issued bonds with a face value of $130,000, a stated rate of interest of 14 percent, and a five-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 13 percent at the time the bonds were issued. The bonds sold for $134,572. Hart used the effective interest rate method to amortize the bond premium. a) Prepare an amortization table. b) Carrying value...
On January 1, Year 1, Young Company issued bonds with a face value of $132,000, a...
On January 1, Year 1, Young Company issued bonds with a face value of $132,000, a stated rate of interest of 16 percent, and a 10-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 15 percent at the time the bonds were issued. The bonds sold for $138,625. Young used the effective interest rate method to amortize the bond premium. Required: a. Determine the amount of the premium...
1. On January 1, a company issues bonds dated January 1 with a par value of...
1. On January 1, a company issues bonds dated January 1 with a par value of $300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $312,177. The journal entry to record the issuance of the bond is: Debit Bonds Payable $300,000; debit Bond Interest Expense $12,177; credit Cash $312,177. Debit Cash $312,177; credit Bonds Payable...
On January 1, 2018, a company issues 3-year bonds with a face value of $190,000 and...
On January 1, 2018, a company issues 3-year bonds with a face value of $190,000 and a stated interest rate of 7%. Because the market interest rate is 5%, the company receives $200,347 for the bonds. Required: Fill in the table assuming the company uses effective-interest bond amortization. (Round your answers to the nearest whole dollar.) rev: 04_19_2019_QC_CS-166500 Next Visit question map Question 2 of 3 Total2 of 3
1.On January 1, Flounder Corp. issues $2280000, 5-year, 12% bonds at 97 with interest payable on...
1.On January 1, Flounder Corp. issues $2280000, 5-year, 12% bonds at 97 with interest payable on January 1. The entry on December 31 to record accrued bond interest and the amortization of bond discount using the straight-line method will include a credit to Discount on Bonds Payable, $13680. debit to Interest Expense, $273600. debit to Interest Expense, $136800. credit to Discount on Bonds Payable, $6840. 2. Oriole Company issued $580000 of 8%, 5-year bonds at 107, which pay interest annually....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT