Multiple Choice
On January 1,a company issues bonds dated January 1 with a par value of $600,000.The bonds mature in 3 years.The contract rate is 7%,and interest is paid semiannually on June 30 and December 31.The bonds are sold for $564,000.The journal entry to record the first interest payment using straight-line amortization is:
A) Debit Interest Payable $21,000; credit Cash $21,000.
B) Debit Interest Expense $21,000; credit Cash $21,000.
C) Debit Interest Expense $27,000; credit Discount on Bonds Payable $6,000; credit Cash $21,000.
D) Debit Interest Expense $15,000; debit Discount on Bonds Payable $6,000; credit Cash $21,000.
E) Debit Interest Expense $21,000; credit Premium on Bonds Payable $6,000; credit Cash $15,000.
Correct Answer:
Verified
Correct Answer:
Verified
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