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  3. squabb corporation issued a $12,000,000,5-year bon

Squabb Corporation issued a $12,000,000,5-year bond, with a contract rate of 8%. The market rate...

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Accounting

Squabb Corporation issued a $12,000,000,5-year bond, with a contract rate of 8%. The market rate of interest for similar bonds was 6%. Interest is payable semi-annually.
The journal entry to record the issuance of this bond will include...
a) a debit to Interest Expense
b) a credit to Premium on Bonds Payable
c)a credit to Cash
d)a debit to Bonds Payable
Blu-Star Corporation issues a $15,000,000,20-year bond with a contract rate of 9%. The market rate of interest for similar bonds is 10%. Interest is payable semi-annually.
What is the amount of interest expense Blu-Star Corporation will recognize with each semi-annual interest payment to bondholders? Round to the nearest whole dollar.
a)$675,000
b)$491,300
c)$707,172
d)$822,200

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