On January 1, a company issued and sold a $411,000, 7%, 10-year bond payable, an

Question

On January 1, a company issued and sold a $411,000, 7%, 10-year bond payable, and received proceeds of $406,000. 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:

Debit Bond Interest Expense $14,135; debit Discount on Bonds Payable $250; credit Cash $14,385.

Debit Bond Interest Expense $14,385; credit Cash $14,385.

Debit Bond Interest Expense $14,635; credit Cash $14,385; credit Discount on Bonds Payable $250.

Debit Bond Interest Expense $14,385; debit Discount on Bonds Payable $250; credit Cash $14,635.

Debit Bond Interest Expense $28,770; credit Cash $28,770.

Explanation / Answer

Date Account Titles Debit Credit June 30 Bond Interest Expense $14,385 Cash $14,385 ($411,000 x 7% x6/12)

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