Question

When recording the payment of interest using the effective-interest method, the entry will include a ______ to Discount on bonds payable in the amount of the difference between the cash payment based on the ______ interest rate and interest expense based on the ______ interest rate. debit; stated; market credit; stated; market debt; market; stated credit; market; stated

Answer 1

Answer:Debit , market, stated.

Explanation: An actual payment of interest from a payables account is always entered as a debit in that account ledger. Then when calculating the effective interest : it is the the difference between the cash payment based on the market interest rate and interest expense based on the stated interest rate.