On January 1, 2009, a company issued and sold a $450,000, 10%, 10-year bond paya

Question

On January 1, 2009, a company issued and sold a $450,000, 10%, 10-year bond payable, and received proceeds of 393,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The journal entry to record the first interest payment is:


Bond Interest Expense 22,500
Discount on Bonds Payable 2,850
Cash 25,350

Bond Interest Expense 45,000
Cash 45,000

Bond Interest Expense 19,650
Discount on Bonds Payable 2,850
Cash 22,500

Bond Interest Expense 22,500
Cash 22,500

Bond Interest Expense 25,350
Cash 22,500
Discount on Bonds Payable 2,850







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Explanation / Answer

semiannual interest payment = 10%* $450,000/2 =22500 Bond Interest Expense 22,500 Cash 22,500

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