Alan Smith Antiques issued its 12%, 10-year bonds payable at a price of $638,550 (face value is $700,000). The company uses the straight-line amortization method for the bond discount or premium. Interest expense for each year is (Round your answer to the nearest whole dollar.) A. $76,626. B. $77,855. C. $90,145. D. $84,000. Starco signed a 5-year note payable on January 1, 2025, of $375,000. The note requires annual principal payments each December 31 of $75,000 plus interest at 13%. The entry to record the annual payment on December 31, 2026, includes A. a debit to Interest Expense for $48,750. B. a credit to Cash of $123,750. C. a debit to Interest Expense for $39,000. D. a credit to Notes Payable for $75,000.

Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 14MC: Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the...
icon
Related questions
Question
Alan Smith Antiques issued its 12%, 10-year bonds payable at a price of $638,550 (face value is $700,000). The company uses the straight-line amortization method for the bond discount or premium. Interest expense for each year is
(Round your answer to the nearest whole dollar.)
A. $76,626.
B. $77,855.
C. $90,145.
D. $84,000.
Transcribed Image Text:Alan Smith Antiques issued its 12%, 10-year bonds payable at a price of $638,550 (face value is $700,000). The company uses the straight-line amortization method for the bond discount or premium. Interest expense for each year is (Round your answer to the nearest whole dollar.) A. $76,626. B. $77,855. C. $90,145. D. $84,000.
Starco signed a 5-year note payable on January 1, 2025, of $375,000. The note requires annual principal payments each December 31 of $75,000 plus interest at 13%. The entry to record the annual payment on December 31, 2026,
includes
A. a debit to Interest Expense for $48,750.
B. a credit to Cash of $123,750.
C. a debit to Interest Expense for $39,000.
D. a credit to Notes Payable for $75,000.
Transcribed Image Text:Starco signed a 5-year note payable on January 1, 2025, of $375,000. The note requires annual principal payments each December 31 of $75,000 plus interest at 13%. The entry to record the annual payment on December 31, 2026, includes A. a debit to Interest Expense for $48,750. B. a credit to Cash of $123,750. C. a debit to Interest Expense for $39,000. D. a credit to Notes Payable for $75,000.
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Principles of Accounting Volume 1
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
College Accounting, Chapters 1-27
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Excel Applications for Accounting Principles
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning