On the first day of the fiscal year, Lisbon Co. issued $1,000,000 of 10-year, 7% bonds for $1,050,000, with interest payable semiannually. Orange Inc. purchased the bonds on the issue date for the issue price. If Lisbon uses the straight-line method for amortizing the premium, the journal entry to record the first semiannual interest payment by Lisbon Co. would include a debit to Interest Payable for $30,000 Premium on Bonds Payable for $5,500 Interest Expense for $32,500 Cash for $70,000 4:26 PM 12/20/2019
On the first day of the fiscal year, Lisbon Co. issued $1,000,000 of 10-year, 7% bonds for $1,050,000, with interest payable semiannually. Orange Inc. purchased the bonds on the issue date for the issue price. If Lisbon uses the straight-line method for amortizing the premium, the journal entry to record the first semiannual interest payment by Lisbon Co. would include a debit to Interest Payable for $30,000 Premium on Bonds Payable for $5,500 Interest Expense for $32,500 Cash for $70,000 4:26 PM 12/20/2019
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![On the first day of the fiscal year, Lisbon Co. issued $1,000,000 of 10-year, 7% bonds for $1,050,000, with interest payable
semiannually. Orange Inc. purchased the bonds on the issue date for the issue price. If Lisbon uses the straight-line method
for amortizing the premium, the journal entry to record the first semiannual interest payment by Lisbon Co. would include a
debit to
Interest Payable for $30,000
Premium on Bonds Payable for $5,500
Interest Expense for $32,500
Cash for $70,000
4:26 PM
12/20/2019](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4cb843f5-81ed-4f74-a38f-3555cb670096%2F45134c0c-4d09-4c99-84a7-6afe686bf823%2Fbpwqrjg.jpeg&w=3840&q=75)
Transcribed Image Text:On the first day of the fiscal year, Lisbon Co. issued $1,000,000 of 10-year, 7% bonds for $1,050,000, with interest payable
semiannually. Orange Inc. purchased the bonds on the issue date for the issue price. If Lisbon uses the straight-line method
for amortizing the premium, the journal entry to record the first semiannual interest payment by Lisbon Co. would include a
debit to
Interest Payable for $30,000
Premium on Bonds Payable for $5,500
Interest Expense for $32,500
Cash for $70,000
4:26 PM
12/20/2019
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