A company issues 7%, 10-year bonds with a face amount of $80,000 on January 1, 2021. The market interest rate for bonds of similar risk and maturity is also 7%. Interest is paid semiannually on June 30 and December 31.1. Record the bond issue.2. Record the first interest payment on June 30, 2021.
What will be an ideal response?
| 1. | Debit | Credit |
| January 1, 2021 | ? | ? |
| Cash | 80,000 | ? |
| Bonds Payable | ? | 80,000 |
| (to record the bond issue) | ? | ? |
| 2. | ? | ? |
| June 30, 2021 | ? | ? |
| Interest Expense | 2,800 | ? |
| Cash ($80,000 × 7% × 1/2) | ? | 2,800 |
| (First semiannual interest payment) | ? | ? |
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