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    swilcox4203's Avatar
    swilcox4203 Posts: 1, Reputation: 1
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    #1

    Nov 14, 2010, 09:31 PM
    issued 3,000, 8%, 5-year, $1,000 bonds dated January 1, 2011, at face value
    I need to record the journal entry for interest paid on July 1 and record interest paid on dec 31. I am stuck
    Just Looking's Avatar
    Just Looking Posts: 1,610, Reputation: 480
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    #2

    Nov 14, 2010, 10:41 PM

    You are to pay 8% per year, with 2 payments - one on July 1 and one on Dec 31.

    A $1000 bond at 8% pays $80 ($1000 * .08) per year. Multiply that by 3,000 to get $240,000. If paid each 6 months, it will be $120,000 each 6 months.

    The entry is a debit to Interest Expense and a credit to Cash.
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