Question

please note it is the second interest payment using the wffective interest method of amortization.

On January 1, a company issues bonds dated January 1 with a par value of $400,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $383,793. The journal entry to record the second interest payment using the effective interest method of amortization is: Multiple Choice Debit Interest Expense $12,648.28; debit Premium on Bonds Payable $1,351.72; credit Cash $14,000.00 Debit interest Payable $14,000.00; credit Cash $14,000.00 Debit interest Expense $12,648.28; debit Discount on Bonds Payable $1,351.72 credit Cash $14,000.00 Debit interest Expense $15,35172; credit Discount on Bonds Payable $1,351.72 credit Cash $14,000.00

Answer 1

Answer :

Debit Interest expense $15405.79 ; Credit on Bonds payable $1405.79 ; Credit Cash $14,000

Giuen SEESSO e bend Rate Par Valu 400,000 Contaraut ৪- semiannually un 5 year Rate maxket 4ntarst paid Bends mature 400000 X/ XY12 Ant rest paid eaih time Beiause paid oumianna 14006 Lnd 5५००5 400,000 s paid at the Jory Paresent Value o 40D,D00 400,000 .04O 708a5 6 SE:20821 Prtsent Valu ntost payments N3SS2.54 400o x O.04 To ral (AtB) 383778 21 11

400,000 Par Vaue Bond PY (incd Intasst 383338. 2). Disiount bue6 221 9r Th 9 DisLount Carung Nauie D) Bond Cosh ap3otacst Expense Date Amprized (C) (B A Paia A) AFX380g47 3 83978.2 383318 21 4- 26 20l6. 383378-2) 4000 13 S1 13 15351 13 38S129 34 38512৭34X4% 5405.79 3112 14000 386S 3 13 1405.79 Journal Enty Antrest Expent e To Disceints on Bonds Payable 1540S 79 -DY 405:79 f4000 Cash To
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