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on january 1, 2024, splash city issues $430,000 of 8% bonds, due in 15 years, with interest payable semiannually on june 30 and december 31 each year. required: assuming the bonds issue for $430,000, record the bond issue on january 1, 2024, and the first two semiannual interest payments on june 30, 2024, and december 31, 2024.

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Answer:

Entry for the bond issue on January 1, 2024, and the first two semiannual interest payments on June 30, and December 31, are prepared as follows

January 01, 2024 (Splash City issues $430,000 of 8% bonds)

                                                Debit     Credit  

Cash                                430,000  

Bonds payable                          430,000    

June 30, 2024 (Interest paid)

                                      Debit       Credit

Interest expense        $17,200  

Cash                                                $17,200

Working

Interest expense = $430,000 x 8% x 6/12

Interest expense = $17,200

December 31, 2024 (Interest paid)

                                       Debit       Credit  

Interest expense         $17,200  

Cash                                                 $17,200

Working

Interest expense = $430,000 x 8% x 6/12

Interest expense = $17,200

To learn more about Interest expense click here:

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