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Lorien Company issued bonds with a coupon rate of 8% and a face amount of $7,500. The bonds mature in 25 years.
Lorien Company issued bonds with a coupon rate of 8% and a face amount of $7,500. The bonds mature in 25 years. The market interest rate for bonds with the same degree of riskiness is 14% compounded annually.These bonds were issued on January 1 of Year 1 for $4,407. Coupon payments are made annually on December 31, so the first coupon payment was made on December 31 of Year 1. Lorien uses the effective-interest method on its books. The journal entry to record the first coupon payment includes which of the following?
A debit to Cash of $7,500A debit to Cash of $600A debit to Discount on Bonds of $617A debit to Discount on Bonds of $17A credit to Premium on Bonds of $17A debit to Interest Expense of $617
