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Question(s) / Instruction(s):

A company issued 8%, 15-year bonds with a par value of $550,000. The current market rate is 8%. The journal entry to record each semiannual interest payment is:

a)            Debit Bond Interest Expense $22,000; credit Cash $22,000.

b)            Debit Bond Interest Expense $44,000; credit Cash $44,000.

c)            Debit Bond Interest Expense $36,667; credit Cash $36,667.

d)            Debit Bond Interest Expense $500,000; credit Cash $500,000.

e)            No entry is needed, since no interest is paid until the bond is due.

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