Final answer:
To record the issuance of bonds for cash on January 1, 2017, debit Cash for the amount received and credit Bonds Payable for the par value. The entries for the semiannual interest payments on June 30, 2017 and December 31, 2017 are the same, debiting Interest Expense and crediting Cash. To record the maturity of the bonds, debit Bonds Payable and credit Cash.
Step-by-step explanation:
To record the issuance of bonds for cash on January 1, 2017, you would debit Cash for the amount received and credit Bonds Payable for the par value of the bonds. Since the bonds are issued at par, the entry would be:
Debit Cash $3,400,000
Credit Bonds Payable $3,400,000
To record the first semiannual interest payment on June 30, 2017, you would debit Interest Expense for the amount of interest owed and credit Cash for the payment made. The entry would be:
Debit Interest Expense $153,000
Credit Cash $153,000
To record the second semiannual interest payment on December 31, 2017, the entry would be the same as the first interest payment:
Debit Interest Expense $153,000
Credit Cash $153,000
To record the maturity of the bonds on December 31, 2020, you would debit Bonds Payable for the par value and credit Cash for the payment:
Debit Bonds Payable $3,400,000
Credit Cash $3,400,000