What should the entity report on the first interest payment

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Problem 1: An entity issued a bond with a stated rate of interest that is more than the effective interest rate on the date of issuance. The bond was issued on one of the interest payment dates. What should the entity report on the first interest payment date?

Group of answer choices

Option 1: A debit to discount on bond payable.

Option 2: An interest expense that is less than the cash payment.

Option 3: A credit to premium on bonds payable.

Option 4: An interest expense that is greater than the cash payment made to bondholders.

Reference no: EM132885532

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