D Question 5 If bonds are issued at a premium, it means that the Market interest rate is higher than the contractual interest rate. financial strength of the issuer is excellent. bondholder effectively will receive more interest than the contractual rate of interest. O market rate of interest is lower than the contractual interest rate. Auction TOVO U Question 6 3.85 pts The Beaumont Company sold for issued) $100,000 of 20-year, 6% contractual rate bonds for $95.000 on January 1.2021. Whatentry should be made on January 1, 2021 when the bonds were issued? Debit Cash 100,000: Credit Bonds Payable 95.000 and Discount on Bonds Payable 5.000 Debit Cash 100.000 Credit Bonds Payable 100.000 Debit Bonds Payable 100,000: Credit Cash 100,000 Debit Cash 95.000 and Discount on Bonds Payable 5,000: Credit Bonds Payable 100,000 The Hammer Corporation shows the following balance sheet presentation for the carrying value of bonds payable Bands payable $1.000.000 Less: Discount on bonds payable 125.000) $ 905,000 Which statement below is correct? The $95.000 is primarily related to the bond being a higher risk of default. The $95,000 represents the amount that was paid to bondholders when the bonds were issued. The $95.000 eventually will be amortized down to zero at the maturity date of the bonds. the bonds mature. The $905,000 represents the amount that bondholders will be paid back A corporation purchases 10,000 of its own $10 par value common stock for $25 per share treasury stock, recording it at cont As a result of the purchase, what will be the effect on total stockholders equity? Increase by $250.000 Decrease by $250,000 Decrease by $100,000 Will have no effect on total stockholders' equity