Question

Brussels Enterprises issues bonds at par dated January 1, 2019, that has a $2,500,000 par value, mature in four years, and pay 6% interest semiannually on June 30 and December 31.

1. Record the entry for the issuance of bonds for cash on January 1.
2. Record the entry for the first semiannual interest payment and the second semiannual interest payment.
3. Record the entry for the maturity of the bonds on December 31, 2022 (assume semiannual interest is already recorded).

Answer 1

Jan 1,2019	Cash	2,500,000
	Bonds payable		2,500,000
June 30,2019	Interest expense	75,000
	Cash		75,000
	(2,500,000*6%*6/12)
Dec 31,2019	Interest Expense	75,000
	Cash		75,000
Dec 31,2022	Bonds payable	2,500,000
	Cash		2,500,000