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(s) to be debited (1), the account(s) to be credited (2) , and the amounts to journalize the payment of the first semiannual interest payment. (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) $80,000; Cash credited (2) $80,000 Cash debited (1) $40,000; Interest expense credited (2) $40,000. Interest expense debited (1) $40,000; Cash credited (2) $40,000.
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(s) to be debited (1), the account(s) to be credited (2) , and the amounts to journalize the payment of the first semiannual interest payment. (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) $80,000; Cash credited (2) $80,000 Cash debited (1) $40,000; Interest expense credited (2) $40,000. Interest expense debited (1) $40,000; Cash credited (2) $40,000.
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(s) to be debited (1), the account(s) to be credited (2) , and the amounts to journalize the payment of the first semiannual interest payment. (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) $80,000; Cash credited (2) $80,000
Cash debited (1) $40,000; Interest expense credited (2) $40,000.
Interest expense debited (1) $40,000; Cash credited (2) $40,000.
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