Question

On January 1, 2013, Lane issues $700,000 of 7%, 15-year bonds at a price of 106 3/4. The interest payments are made on June 30 and December 31. The straight-line method is used to amortize any bond discount or premium. Lane elects a fiscal year ending September 30. What is the appropriate adjusting journal entry required for September 30, 2013?

A.


Interest Expense 22,925
Cash 22,925

B.


Interest Expense 22,925
Premium on Bonds Payable 1,575
Cash 24,500

C.

Answer

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