Question

On January 1, $500,000 of 8%, 10-year bonds were sold for $530,000. The bonds require semiannual interest payments on June 30 and December 31. What's the correct entry for recording the June 30 interest payment on the bonds?

Answer 1

Answer and Explanation:

The journal entry is given below:

Date Accounting & Explanation Debit ($) Credit ($)

30th June Expenses account interest 18,500

Amortization of the bonus

premium due will be:

`((30000)/(20) )` 1,500

Accounts cash:

`(500000* 8 \ percent* (6)/(12))` 20,000