Question

1. Discount on bonds payable and Premium on bonds payable are examples​ of:

A.equity accounts.

B.estimated accounts.

C.contraminus−accounts.

D.companion accounts.

2.​$300,000 of​ 10%, 20−year bonds were sold for​ $325,000 on January 1. The bonds require semiannual interest payments on June 30 and December 31. The entry to record the June 30 interest payment on the bonds would be​ to: (Round your final answer to the nearest​ dollar.)

A.debit Interest Expense​ $14,375; credit​ Cash, $14,375.

B.debit Interest Expense​ $15,625; credit Premium on bonds​ payable, $625; credit​ Cash, $15,000.

C.debit Interest Expense​ $15,000; credit​ Cash, $15,000.

D.debit Interest Expense​ $14,375; debit Premium on bonds​ payable, $625; credit​ Cash, $15,000.

3.$200,000 of​ 7%, 25−year bonds were sold for​ $170,000 on January 1. The bonds require semiannual interest payments on June 30 and December 31. The entry to record the June 30 interest payment on the bonds would be​ to:

A.debit Interest Expense​ $6,400; debit Discount on bonds​ payable, $600; credit​ Cash, $7,000.

B.debit Interest Expense​ $7,000; credit​ Cash, $7,000.

C.debit Interest Expense​ $7,600; credit Discount on bonds​ payable, $600; credit​ Cash, $7,000.

D.debit Interest Expense​ $7,600; credit​ Cash, $7,600.

Answer 1

1

Discount on bonds payable and Premium on bonds payable are examples​ of contra−accounts.

Option C is correct

2
Semi-annual interest payable	15000	=300000*10%*6/12
Semi-annual premium amortization	625	=(325000-300000)/20*6/12
debit Interest Expense​ $14,375; debit Premium on bonds​ payable, $625; credit​ Cash, $15,000
Option D is correct

3
Semi-annual interest payable	7000	=200000*7%*6/12
Semi-annual discount amortization	600	=(200000-170000)/25*6/12
debit Interest Expense​ $7,600; credit Discount on bonds ​payable, $600; credit​ Cash, $7,000.
Option C is correct