Face Value Bonds Video Lessons

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Problem: A company issues $400,000 of 8% bonds, which mature in 10 years, at par on January 1, 2011. The bonds pay interest semiannually on each June 30 and December 31. What entry should be made on December 31, 2011? A.Debit Bond Interest Expense $32,000; Credit Bond Interest Payable $32,000. B.Debit Bond Interest Expense $32,000; Credit Cash $32,000. C.Debit Bond Interest Expense $16,000; Credit Bond Interest Payable $16,000. D.Debit Bond Interest Expense $16,000; Credit Cash $16,000. E.None of the above

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A company issues $400,000 of 8% bonds, which mature in 10 years, at par on January 1, 2011. The bonds pay interest semiannually on each June 30 and December 31. What entry should be made on December 31, 2011?

A.Debit Bond Interest Expense $32,000; Credit Bond Interest Payable $32,000.

B.Debit Bond Interest Expense $32,000; Credit Cash $32,000.

C.Debit Bond Interest Expense $16,000; Credit Bond Interest Payable $16,000.

D.Debit Bond Interest Expense $16,000; Credit Cash $16,000.

E.None of the above

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