Trego's entry at June 30, 2012, to record the first semiannual payment of interest and amortization of discount/premium on the bonds includes a:
A) Debit to Bond Interest Expense of $20,000.
B) Credit to Cash of $22,000.
C) Credit to Premium on Bonds Payable of $2,000.
D) Debit to Bond Interest Expense of $22,000.

Question

Quizplus · Accepted Answer

The first semiannual payment of interest and amortization of discount/premium on the bonds would decrease the carrying value of the bond since the payment would consist of interest expense and a portion of the discount/premium. Therefore, there would be a debit to Bond Interest Expense for the total semiannual payment of $22,000.

Trego's Entry at June 30, 2012, to Record the First