On January 1, 2017, Simpson Sales issued $23,000 in bonds for $35,800
These are eight-year bonds with a stated rate of 9% and pay semiannual interest. Simpson Sales uses the straight-line method to amortize the bond premium. Immediately after the issue of the bonds, the ledger balances are as follows:
Bonds Payable
23,000
Premium on Bonds Payable
12,800
After the first interest payment on June 30, 2017, what is the balance of Premium on Bonds Payable?
A) debit of $800
B) debit of $14,400
C) credit of $235
D) credit of $12,000
D .Premium on Bonds Payable $12,800
Less: Amortization of Premium ($12,800 / 8 x 1/2 ) 800
Balance $12,000
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