Rowan Corporation,a calendar-year firm,is authorized to issue $200,000 of 10 percent,20-year bonds dated January 1,2014,with interest payable on January 1 and July 1 of each year.If the bonds were issued to yield 12 percent,the entry to account for the discount amortization and accrual of interest on December 31,2014,would include a

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The correct answer is a credit to Interest Payable. This is because, at the end of the year (December 31, 2014), interest for the period has been incurred but not yet paid, making it necessary to recognize this accrued interest as a liability (Interest Payable). Interest is paid on January 1 and July 1, so on December 31, interest for the period from July 1 to December 31 needs to be accrued.

Rowan Corporation,a Calendar-Year Firm,is Authorized to Issue $200,000 of 10