Assuming no adjusting journal entries have been made,the journal entry to record the cash interest payment on the due date for bonds issued at their par value results in which of the following?
A)An increase in expenses and a decrease in liabilities.
B)An increase in expenses and a decrease in assets.
C)A decrease in both liabilities and stockholders' equity.
D)A decrease in both assets and liabilities.

Question

Quizplus · Accepted Answer

When a cash interest payment is made on bonds issued at par value, it is recorded as an interest expense, which increases expenses, and a decrease in the bond liability, which decreases assets. Therefore, the correct answer is B) An increase in expenses and a decrease in assets.

Assuming No Adjusting Journal Entries Have Been Made,the Journal Entry