On January 2, 2017, Chabot Sales issues $10,000 in bonds for $10,900
These are 5-year bonds with a stated rate of 4%, and pay semiannual interest. Chabot Sales uses the straight-line method to amortize bond premium. Prepare the journal entry for the first interest payment on June 30, 2017.
What will be an ideal response
Interest Expense 110
Premium on Bonds Payable 90
Cash 200 .Interest Expense = ($10,000 x 4% x 6/12 ) - ($900 / 10 ) = $110
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