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Accounting...CHALLENGING?
1) A corporation issues $100,000, 10%, 5-year bonds on January 1, 2011, for $104,200. Interest is paid semiannually on January 1 and July 1. If the corporation uses the straight-line method of amortization of bond premium, the amount of bond interest expense to be recognized on July 1, 2011, is
a. $10,420.
b. $5,420.
c. $5,000.
d. $4,580.
2) The journal entry a company records for the issuance of bonds when the contract rate is less than the market rate would be
a. debit Bonds Payable, credit Cash
b. debit Cash and Discount on Bonds Payable, credit Bonds Payable
c. debit Cash, credit Premium on Bonds Payable and Bonds Payable
d. debit Cash, credit Bonds Payable
please help me out...idk what to do
1 Answer
- Don GLv 78 years ago
Interest due July 1 - 100,000 @ 5% = 5,000
S/L amortization of bond premium - 4,200 / 10 = 420
Net interest expense = 4,580
