Discuss the market interest rate at the date of issuance

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Hicks Corporation issued $ 500,000 of 5 %, 10-year bonds payable at a price of 92 . The market interest rate at the date of issuance was 6 %, and the bonds pay interest semiannually. The journal entry to record the first semiannual interest payment using the effective-interest amortization method is
(D) = debit
(C)=credit

A: interest expense 14,500(D)
Discount on Bonds Payable 2,000(C)
Cash 12,500(C)
B:interest Expense 13,800(D)
Discount on Bonds Payable 1,300(C)
Cash 12,500(C)
C: interest expense 17,000(D)
Discount on bonds payable 2000(C)
cash 15,000(C)
D: interest Expense 16,300(D)
Discount on bonds payable 1,300(C)
cash 15,000(C)

 

Reference no: EM131760744

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