ABC Company issued $100,000 4-year term bonds at face value with 7% interest paid semi-annually.

		Debit Cash, $107,000, Credit Bonds Payable $100,000, Credit Premium on Bonds $7,000
		Debit Bonds Payable $100,000 Credit Cash $100,000
		Debit Cash, $107,000, Credit Bonds Payable $100,000, Credit Premium on Bonds $7,000
		Debit Cash $100,000, Credit Bonds Payable $100,000

What are the journal entries when the interest on the bonds is paid and the premium or discount is amortized?

		Debit Interest Expense $3,500 Credit Cash $3,500, no entry required for the amortization
		Debit Interest Expense $7,000 Credit Cash $7,000 for the interest expense Debit Premium on Bonds $3500, Credit Interest Expense $3,500 for the amortization
		Debit Interest Expense $3,500 Credit Cash $3,500 for the interest expense Debit Premium on Bonds $3500, Credit Interest Expense $3,500 for the amortization
		Debit Interest Expense $3,500, Credit Interest Payable $3,500 for the interest No entry required for the amortization

Answer rating: 100% (QA)

The correct journal entries would be a Debit Cash 100000 Credit Bonds Payable 100000 for the face va... View the full answer