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Schach [20]
3 years ago
8

On January 1, your company issues a 5-year bond with a face value of $10,000 and a stated interest rate of 6%. The market intere

st rate is 4%. The issue price of the bond was $11,016. Your company used the effective-interest method of amortization. At the end of the first year, your company should:_____.a. debit Interest Expense for $800, credit Premium on Bonds Payable for $145.00, and credit Interest Payable for $655.00.b. debit Interest Expense for $655.00 and credit Interest Payable for $655.00.c. debit Interest Expense for $655.00, debit Premium on Bonds Payable for $145.00, and credit Cash for $800.d. debit Interest Expense for $800, debit Premium on Bonds Payable for $145.00, and credit Interest Payable for $655.00.
Business
1 answer:
Lapatulllka [165]3 years ago
5 0

Answer:

Debit Interest Expense $440.64, Debit Premium on Bonds Payable $159.36 and Credit Cash $600

Explanation:

Amount paid in cash = $10,000 * 6% = $600

Interest expense = $11,016 * 4% = $440.64

Amortization of premium on bonds payable = Amount paid in cash - Interest expense

Amortization of premium on bonds payable = $600  - $440.64

Amortization of premium on bonds payable = $159.36.

Debit Interest Expense $440.64

Debit Premium on Bonds Payable $159.36

Credit Cash $600

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Do all rational consumers think alike why or why not
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3 years ago
Why is there a time value of money (cash received today is valued more than cash received a year fromnow)?a. Interest rates are
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Answer:

<u>A and B are correct</u>

Explanation :

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Answer:

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Explanation:

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amounts paid in;

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and

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= $41,200

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Answer:

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