Question

Salt Lake Glassware Company issues $1,121,000 of its 12%, 10-year bonds at 99 on February 28, 2017. The bonds pay interest on February 28 and August 31. Assume that Salt Lake uses the straight-line method for amortization. The journal entry to record the first interest payment on August 31, 2017 includes a ________.

Answer 1

Debit Interest Expense 67,821

Credit disc 560.5

Cr Cash 67,260

Step-by-step explanation:

Based on the information given the appropriate journal entry to record the first interest payment on August 31, 2017 includes a:.

Debit Interest Expense 67,821

($67260 + $560.5)

Credit disc 560.5

[ $1,121,000 ×(100%÷99%) ÷ 20 = $560.5]

Cr Cash 67,260

( $1,121,000 × 12% × 6÷12= $67,260)

( Being interest expense is recorded)