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On January 1, Year 1 Residence Company issued bonds with a $50,000 face value. The bonds were issued at 104 resulting in a 4%

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Answer #1

Premium = 50000 x 4% = $2000

Account Titles Debit Credit
Interest expense $3400
Premium on bonds payable (2000/20) 100
Cash (50000x7%) $3500

Option c is correct answer.

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