A company issued T15year bonds with a par value of 50000 tha

A company issued T%,15-year bonds with a par value of $50,000 that pay interest sermannualy. The market rate on the date of issuance was 7% The journal entry to record each semiannual interest payment is Debit Bond Interest Expense $17,850, credt Cash $17,850 Debit Bond Intenest Expense $35,700, cnedit Cosh 535,200 Debt Bond Ienest Peyble $34,000credt Cash $34.000 Debit Bond Ineres Expense 5460000 cedt Cesh 5400000 Alt

Solution

To record the payment of semiannual interest, first calculate the intereest:

=$510000*6/12*7%=$17850.

The journal entry will be:

Interest Expense A/C Dr.      $17850

   To Cash A/C                                 $17850

Thus, the correct option is the first one.