A company issued 8%, 15-year bonds with a par value of $450,000 that pay interest semiannually. The market rate on the date of issuance was 8%. The journal entry to record each semiannual interest payment is:

Question

Answer

Debit Bond Interest Expense $18,000; credit Cash $18,000.

Answer

Debit Bond Interest Expense $36,000; credit Cash $36,000.

Answer

Debit Bond Interest Payable $30,000; credit Cash $30,000.

Answer

Debit Bond Interest Expense $400,000; credit Cash $400,000.

Answer

No entry is needed, since no interest is paid until the bond is due.

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A company issued 8%, 15-year bonds with a par value of $450,000 that pay interes...

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