A company issued 10-year, 9% bonds with a par value of $500,000 when the market rate was 9.5%. The company received $484,087 in cash proceeds. Using the straight-line method, prepare the issuer's journal entry to record the first semiannual interest payment and the amortization of any bond discount or premium.(Round amounts to the nearest whole dollar)
What will be an ideal response?
| Bond Interest Expense | 23,296 | ? |
| Discount on Bonds Payable | ? | 796 |
| Cash | ? | 22,500 |
Cash payment: $500,000 * 9% * ½ year = $22,500
Discount amortized: ($500,000 ? $484,087)/20 semiannual periods = $795.65
Interest expense: $22,500 + $795.65 = $23,295.65
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