Question

On June 30, Teller Industries issues 8%, 20-year bonds payable with a face value of $210,000....

On June 30, Teller Industries issues 8%, 20-year bonds payable with a face value of $210,000. The bonds are issued at 96 and pay interest on June 30 and December 31.

The entry to record the semiannual interest payment and amortization of the bond discount on December 31 would look like which of the following?

Date Accounts and Explanations Post Ref DEBIT CREDIT
1 Cash $201,600
Discount on Bonds Payable $8,400
    Bonds Payable $210,000
2 Interest Expense $8,400
    Cash $8,400
3 Interest Expense $8,610
   Discount on Bonds Payable $210
   Cash $8,400
4 Cash $8,400
   Discount on Bonds Payable $420
   Bonds Payable $7,980
5 None of the other entries

A.

Item number 5 is correct
B.

Item number 1 is correct
C.

Item number 4 is correct
D.

Item number 2 is correct
E.

Item number 3 is correct
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