On January 1, 2019, Castle Services issued $177,000 of six-year, 12% bonds when the market interest rate was 11%. The bonds were issued for $185,000. Castle uses the effective - interest method to amortize the bond premium. Semiannual interest payments are made on June 30 and December 31 of each year. Which of the following is the correct journal entry to record the first interest payment? (Round your answers to the nearest dollar number.) OA. Interest Expense Premium on Bonds Payable Cash OB. Interest Expense Cash OC. Interest Expense Discount on Bonds Payable Cash OD. Cash Premium on Bonds Payable Interest Expense 10,175 445 9,735 885 9,735 10,620 10,620 9,735 10,620 885 9,735
On January 1, 2019, Castle Services issued $177,000 of six-year, 12% bonds when the market interest rate was 11%. The bonds were issued for $185,000. Castle uses the effective - interest method to amortize the bond premium. Semiannual interest payments are made on June 30 and December 31 of each year. Which of the following is the correct journal entry to record the first interest payment? (Round your answers to the nearest dollar number.) OA. Interest Expense Premium on Bonds Payable Cash OB. Interest Expense Cash OC. Interest Expense Discount on Bonds Payable Cash OD. Cash Premium on Bonds Payable Interest Expense 10,175 445 9,735 885 9,735 10,620 10,620 9,735 10,620 885 9,735
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![On January 1, 2019, Castle Services issued $177,000 of six-year,
12% bonds when the market interest rate was 11%. The bonds were
issued for $185,000. Castle uses the effective - interest method to
amortize the bond premium. Semiannual interest payments are
made on June 30 and December 31 of each year. Which of the
following is the correct journal entry to record the first
interest payment? (Round your answers to the nearest
dollar number.)
OA. Interest Expense
Premium on Bonds Payable
Cash
B. Interest Expense
Cash
OC. Interest Expense
Discount on Bonds Payable
Cash
O D. Cash
Premium on Bonds Payable
Interest Expense
9,735
885
10,175
445
9,735
10,620
10,620
9,735
10,620
885
9,735](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa989bf88-dd22-46b8-852d-ab08e70d9b28%2F4e1b761c-cade-4dce-9641-546a419b1ad2%2F3chr50c_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On January 1, 2019, Castle Services issued $177,000 of six-year,
12% bonds when the market interest rate was 11%. The bonds were
issued for $185,000. Castle uses the effective - interest method to
amortize the bond premium. Semiannual interest payments are
made on June 30 and December 31 of each year. Which of the
following is the correct journal entry to record the first
interest payment? (Round your answers to the nearest
dollar number.)
OA. Interest Expense
Premium on Bonds Payable
Cash
B. Interest Expense
Cash
OC. Interest Expense
Discount on Bonds Payable
Cash
O D. Cash
Premium on Bonds Payable
Interest Expense
9,735
885
10,175
445
9,735
10,620
10,620
9,735
10,620
885
9,735
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education