$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 $15,000; credit Cash, $15,000.
B) debit Interest Expense $15,625; credit Premium on bonds payable, $625; credit Cash, $15,000.
C) debit Interest Expense $14,375; debit Premium on bonds payable, $625; credit Cash, $15,000.
D) debit Interest Expense $14,375; credit Cash, $14,375.
C) debit Interest Expense $14,375; debit Premium on bonds payable, $625; credit Cash, $15,000.
Explanation: step 1) determine stated interest for cash amount; step 2) determine amortized premium; step 3) determine interest expense (cash - amortized premium).
Ex: step 1: $300,000 × 10% × 1/2 = $15,000 cash; step 2) Premium: $325,000 - $300,000 = $25,000 / 20 years = $1,250 × 1/2 = $625 amortized premium; step 3) $15,000 - $625 = $14,375
interest expense.
You might also like to view...
Periodically, the Walt Disney Company recycles its oldest animated films, such as Snow White, back into movie theaters to delight a new generation of consumers
To what classification of the BCG growth-market share matrix would these old movies belong? Explain.
A donee beneficiary:
a. is not entitled to enforce a contract against either party. b. usually does not give consideration in return for the gift. c. will generally become a creditor beneficiary after his or her rights vest. d. is an incidental beneficiary.
[The following information applies to the questions displayed below.] Sanchez Company engaged in the following transactions during Year 1: 1) Started the business by issuing $42,000 of common stock for cash. 2) The company paid cash to purchase $26,400 of inventory. 3) The company sold inventory that cost $16,000 for $30,600 cash. 4) Operating expenses incurred and paid during the year, $14,000. Sanchez Company engaged in the following transactions during Year 2: 1) The company paid cash to purchase $35,200 of inventory. 2) The company sold inventory that cost $32,800 for $57,000 cash. 3) Operating expenses incurred and paid during the year, $18,000. Note: Sanchez uses the perpetual inventory system.What is Sanchez's gross margin for Year 2?
A. $6,200 B. $24,200 C. $32,800 D. $21,800
Jack sells Jim a used car that Jack falsely described as having been driven only 12,000 miles. Fraud has occurred if: A) Jim bought the car solely because of its color
B) Jim knew that the mileage was more than 12,000 miles. C) Jim relied upon Jack's statement. D) Jack is a merchant.