Question

If bonds with a face value of $750,000 and a stated rate of 5%, are issued at par on January 1st, the journal entry to record the issuance is: Assuming interest is paid annually on December 31st what is the journal entry to record interest payments

Answer 1

Answer:

debit interest expense and credit cash

Explanation:

Remember journal entries records all the various transactions of a company (including bond issuer) in the form of either debit or credit transactions.

The issuance of the bond on the journal entry would be to debit interest expense and credit cash because the issuer of the bond receives cash ( a face value of $750,000) from investors and thus would record a liability for the bonds issued.