Question

Exercise 9-10A Record bonds issued at face amount and related semiannual interest (LO9-5) On January 1, 2021, White Water issues $490,000 of 5% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Required: Assuming the market interest rate on the issue date is 5%, the bonds will issue at $490,000. Record the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

January 1, 2021	Cash	$490,000
	Bonds payable		$490,000
June 30, 2021	Interest expense ($490,000*2.5%)	$12,250
	Cash		$12,250
December 31, 2021	Interest expense	$12,250
	Cash		$12,250