A company issued 8%, 15-year bonds with a par value of $550,000 that pay interest semiannually....
A company issued 8%, 15-year bonds with a par value of $550,000 that pay interest semiannually. The market rate on the date of issuance was 8%. The journal entry to record each semiannual interest payment is:
Multiple Choice
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Debit Bond Interest Expense $22,000; credit Cash $22,000.
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No entry is needed, since no interest is paid until the bond is due.
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Debit Bond Interest Payable $22,000; credit Cash $22,000.
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Debit Bond Interest Expense $44,000; credit Cash $44,000.
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Debit Bond Interest Expense $550,000; credit Cash $550,000.
Homework Answers
Interest that is payable semi anually is $550,000 *8%/2 =$22,000
Entry to record each semi annual interest payment is
Debit Bond interest expense $22,000, credit cash $ 22,000
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1. Prepare the January 1, 2017, journal entry
to record the bonds' issuance.
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