Reference no: EM132831867
Question - On January 1, a company issues bonds dated January 1 with a par value of $390,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semi-annually on June 30 and December 31. The market rate is 8% and the bonds are sold for $405,830. What the journal entry to record the first interest payment using straight-line amortization?
a. Debit Bond Interest Expense $15,967; debit Discount on Bonds Payable $1,583; credit Cash $17,550.
b. Debit Bond Interest Expense $15,967; debit Premium on Bonds Payable $1,583; credit Cash $17,550.
c. Debit Bond Interest Expense $19,133; credit Discount on Bonds Payable $1,583; credit Cash $17,550.
d. Debit Bond Interest Expense $19,133; credit Premium on Bonds Payable $1,583; credit Cash $17,550.
e. Debit Interest Payable $17,550; credit Cash $17,550.
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