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

Question

Quizplus · Accepted Answer

The journal entry to record the cash payment of interest on the due date increases interest expense and decreases the premium on bonds payable account, an adjunct-liability account. Decreasing an adjunct-liability account decreases the book value of the bonds.

Assuming No Adjusting Journal Entries Have Been Made During the Year,the