90.2K

Verified Solution

Link Copied!

On January 1, 2019, Castle Services issued $173,000 of six - year, 12% bonds when the market interest rate was 11%. The bonds were issued for $177,000. 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.) 10,380 A. Cash Premium on Bonds Payable Interest Expense B. Interest Expense Cash 865 9,515 9,515 9,515 9,515 865 10,380 C. Interest Expense Discount on Bonds Payable Cash D. Interest Expense Premium on Bonds Payable Cash 9,735 645 10,380 The balance in the Bonds Payable is a credit of $77,000. The balance in the Premium on Bonds Payable is a credit of $1,500. What is the bond carrying amount? A. $1,500 B. $77,000 C. $75,500 D. $78,500 On March 1, 2018, Barker Services issued a 6% long-term notes payable for $21,000. It is payable over a 3-year term in $7,000 annual principal payments on March 1 of each year plus interest, beginning March 1, 2019. How will the notes payable be shown on the balance sheet dated December 31, 2018? A. $21,000 shown as current liability only B. the entire $21,000 shown as long-term liability C. $7,000 shown as current liability and $14,000 shown as long - term liability D. $7,000 shown as current liability and $21,000 shown as long - term liability

Answer & Explanation Solved by verified expert

See Answer