Trego Company issued, on December 31, 2015, $1,000,000 facevalue, 4%, 5-year bonds. Interest will be paid semiannually eachJune 30 and December 31. The bonds sold at a price of 102; Tregouses the straight-line method of amortizing bond discount orpremium.
1. Refer to the informationabove. Trego’s entry at June 30, 2016, to record the firstsemiannual payment of interest and amortization of discount/premiumon the bonds includes a:
1. Credit to Cash of $22,000.
2. Debit to Bond Interest Expense of $20,000.
3. Debit to Bond Interest Expense of $18,000.
4. Credit to Premium on Bonds Payable of $2,000.