Question

If bonds are issued between interest dates, the entry on the books of the issuing corporation could include a

a. debit to Interest Payable.
b. credit to Interest Receivable.
c. credit to Interest Expense.
d. credit to Unearned Interest

Answer 1

When issuing bonds between interest dates, the journal entry could include a debit to Interest Expense to record the interest incurred from issue date to the first interest payment date.

Step-by-step explanation:

If bonds are issued between interest dates, the journal entry on the books of the issuing corporation could potentially include a debit to Interest Expense. This typically happens because the issuer needs to record the interest expense incurred from the issue date to the first interest payment date. However, it would not include a credit to Unearned Interest, as this account is used when interest has been received in advance, which is not the case here. Neither would it include a debit to Interest Payable nor a credit to Interest Receivable, as these are related to interest that is owed by the corporation or due to it, respectively, and are not typically involved in the initial recording of bond issuance.