On July 1, 2020, Cargo Corporation Issues $4,000,000 of 10-Year

Multiple Choice

On July 1, 2020, Cargo Corporation issues $4,000,000 of 10-year bonds dated July 1, 2020, at 100 1/2 when the market rate of interest was 8%. Cargo Corporation uses the effective-interest method of amortization. Interest is paid each June 30 and December 31. The entry to record the first
Semi-annual interest payment on December 31, 2020, will include a:

A) credit to Interest Payable for $160,000
B) debit to Interest Expense for $160,800
C) credit to Premium on Bonds Payable for $320,000
D) debit to Premium on Bonds Payable for $321,600