Question

On January 1, Boston Enterprises issues bonds that have a $1,650,000 par value, mature in 20 years, and pay 10% interest semiannually on June 30 and December 31. The bonds are sold at par. 1. How much interest will Boston pay (in cash) to the bondholders every six months

Answer 1

$82,500

Step-by-step explanation:

the journal entry to record the bond issuance

Dr Cash 1,650,000

Cr Bonds payable 1,650,000

bonds sold at par

Every 6 months it will pay = $1,650,000 x 10% x 1/2 = $82,500

journal entry to record first coupon payment

Dr Interest expense 82,500

Cr Cash 82,500