Grocery Corporation received $304,828 for 13.00 percent bonds issued on January 1, 2015, at a market interest rate of 10.00 percent. The bonds had a total face value of $254,000, stated that interest would be paid each December 31, and stated that they mature in 10 years. Prepare journal entry by indicating (a) whether it is reported on the Balance Sheet (B/S) or Income Statement (I/S); (b) the dollar amount by which the account increases, decreases, or does not change (0) when Grocery Corporation issued the bonds; and (c) the direction of change in account [increase, decrease, or no change] when Grocery Corporation records the interest payment on December 31.

Which of the following statements is correct? stockholders should generally be happier than bondholders to have managers invest in risky projects with high potential returns as opposed to safe projects with lower expected returns. potential conflicts between stockholders and bondholders are increased if a firm's bonds are convertible into its common stock. takeovers are most likely to be attempted if the target firm’s stock price is above its intrinsic value. one advantage of operating a business as a corporation is that stockholders can deduct their pro rata share of the taxes the firm pays, thereby eliminating the double taxation investors would face in a partnership.