On the first day of its fiscal year, J Co. issued $1,000,000 of five-year, 8% bonds to finance the remodeling of an office building. Interest is payable semiannually. The bonds were issued at an effective interest rate of 11%, resulting in J Co. receiving cash of $886,935. Give the account to be debited, the account to be credited, and the amount to journalize the amortization of the discount/premium at the end of the first year using the straight-line method of amortization. (Amortization of discount/premium is to be recorded annually.) All amounts are to be rounded to the nearest dollar. DATE DESCRIPTION PREF DEBIT CREDIT (1) ? (2) ? Group of answer choices Interest expense debited (1) $11,306; Discount on Bonds Payable credited (2) $11,306 Interest expense debited (1) $11,306; Premium on Bonds Payable credited (2) $11,306 Discount on Bonds Payable debited (1) $11,306; Premium on Bonds Payable (2) credited $11,306 Interest expense debited (1) $11,306; Cash credited (2) $11,306
On the first day of its fiscal year, J Co. issued $1,000,000 of five-year, 8% bonds to finance the remodeling of an office building. Interest is payable semiannually. The bonds were issued at an effective interest rate of 11%, resulting in J Co. receiving cash of $886,935. Give the account to be debited, the account to be credited, and the amount to journalize the amortization of the discount/premium at the end of the first year using the straight-line method of amortization. (Amortization of discount/premium is to be recorded annually.) All amounts are to be rounded to the nearest dollar. DATE DESCRIPTION PREF DEBIT CREDIT (1) ? (2) ? Group of answer choices Interest expense debited (1) $11,306; Discount on Bonds Payable credited (2) $11,306 Interest expense debited (1) $11,306; Premium on Bonds Payable credited (2) $11,306 Discount on Bonds Payable debited (1) $11,306; Premium on Bonds Payable (2) credited $11,306 Interest expense debited (1) $11,306; Cash credited (2) $11,306
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On the first day of its fiscal year, J Co. issued $1,000,000 of five-year, 8% bonds to finance the remodeling of an office building. Interest is payable semiannually. The bonds were issued at an effective interest rate of 11%, resulting in J Co. receiving cash of $886,935. Give the account to be debited, the account to be credited, and the amount to journalize the amortization of the discount/premium at the end of the first year using the straight-line method of amortization. (Amortization of discount/premium is to be recorded annually.) All amounts are to be rounded to the nearest dollar.
|
DATE |
DESCRIPTION |
PREF |
DEBIT |
CREDIT |
|
|
(1) |
? |
||
|
|
(2) |
? |
Group of answer choices
Interest expense debited (1) $11,306; Discount on Bonds Payable credited (2) $11,306
Interest expense debited (1) $11,306; Premium on Bonds Payable credited (2) $11,306
Discount on Bonds Payable debited (1) $11,306; Premium on Bonds Payable (2) credited $11,306
Interest expense debited (1) $11,306; Cash credited (2) $11,306
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