Question

14 Ch. 9 8 10 90 min.) Help Save & Ex Submit On January 1, a company issued and sold a $391,000,7%, 10 year bond payable and received proceeds of $386.000. Interesi payable each Jurve 30 and December 31. The company uses the straight line method to amortize the discount. The journal entry to record the first interest payment is Multiple Choice Debit Bond Interest Expense $13,685 Credit Cash $13.685 Debit Dond Interest Expense 5130 Credit Cash $13689 Credit Discount on Bonds Payable $250 Debit Bond Interest Expense $13,685, debit Discount on Bonds Payable $250. Credit Cash 1195 Oo oo Debet Bond Interest Expense $27370. Credit Cash $27370 Debit Bond Interest Expense $13.435. debit Discount on Bonds Payable $250. Credit Cash $13,685 < Prev 29 of 33 Next >

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.

Answer 2 Part 1) 3 The correct answer is 4 Debit bond interest expense $13935, credit $13685, credit discount on bonds payable $250 6 Explanation 7 Interest expense = cash paid as interest + discount amortised 8 = (391000*7%/2)+(391000-386000)/(10*2) 9 = $ 13685 +$ 250 10 = $ 13935 11 12 Part 2) 13 The correct answer is 14 Debit bond interest expense $22050, credit cash $22050 15 16 Interest expense = $490000*9%/2 17 = $ 22050 18 19 Cash Paid = $ 22050 20

21 Part 3) 22 The correct answer is 23 Debit cash $280420, credit Premium on bonds payable $10420, credit bonds payable $270000 24 25 Explanation 26 Since the bonds are issued above face value it means it has been issued at Premium. So the correct entry has been mentioned above 27 28 Part 4) 29 The correct answer is 30 $1070 and the stated interest rate was higher than the market interest rate. 31 32 Explanation 33 Sinve the bonds at premium, so it means the stated interest rate is more than the market interest rate. 34 35 Part 5) 36 The correct answer is 37 Adonis must pay $ 120000 at maturity plus 20 interest payments of $5400 each 38 39 Explanation 40 Adonis will pay face value along with 20 payment of interest of amount $ 5400 (120000*9%/2) 41 42 Note As per HomeworkLib policy we are required to solve first 4 parts, buti have solved the first 5 parts. I would have solved the sixth part as well but the image for 6th part is not clear. For 6th part you have to post separate question and it 43 will get solved Activ Go to