On January 1, a company issued and sold a $404,000, 6%, 10-year bond payable, an
ID: 2501675 • Letter: O
Question
On January 1, a company issued and sold a $404,000, 6%, 10-year bond payable, and received proceeds of $399,000. 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 $11,870; debit Discount on Bonds Payable $250; credit Cash $12,120.
Debit Bond Interest Expense $12,120; credit Cash $12,120.
Debit Bond Interest Expense $24,240; credit Cash $24,240.
Debit Bond Interest Expense $12,370; credit Cash $12,120; credit Discount on Bonds Payable $250.
Debit Bond Interest Expense $12,120; debit Discount on Bonds Payable $250; credit Cash $12,370.
Explanation / Answer
The journal entry to record the first interest payment is: Debit Bond Interest Expense $12,370; credit Cash $12,120; credit Discount on Bonds Payable $250.
Debit Credit
Debit Bond Interest Expense $12,370;
credit Cash $12,120;
credit Discount on Bonds Payable $250.