Reference no: EM132943321
Problem 1: On December 31, 2020, Sovereign Co. issued a 10-year bond with an interest of 8%. The interest is payable annualy every December 31 of each year and the bond matures on December 31, 2030. Which of the following statement(s) is/are correct?
Select one:
a. The accrued interest due before the end of the year is classified as current liability.
b. The entry to record the accrued interest will include debiting interest expense and crediting interest payable.
c. All of the available choices.
d. The principal amount is classified as long-term liability.
Problem 2: For bonds that are issued at a discount, what is the amount of interest expense reported on the bond issuer's income statement?
Select one:
a. The bond's contractual interest plus the amortized portion of the discount
b. The bond's contractual interest
c. The bond's contractual interest minus the amortized portion of the discount
d. The amortized portion of the discount
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