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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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