On 1 April, year 1, Happy Corporation issues $50 million of 10%, 30-year bonds payableat par. Interest on the bonds is payable semiannually each 1 April and 1 October.The journal entry to record the first cash payment to bondholders on 1 October, year 1, willinclude:A credit to Cash of $5,000,000.B.A credit to Interest Payable of $2,500,000.A debit to Bonds Payable of $5,000,000.C.D.A debit to Interest Expense of $2,500,000.A.

Journal entry to record first cash payment to bondholders:

Answered: On 1 April, year 1, Happy Corporation…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On the first day of the fiscal year, a company issues a $4,900,000, 6%, 6-year bond that pays semiannual interest of $147,000 ($4,900,000 × 6% × ½), receiving cash of $4,440,130. Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.
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On the first day of the fiscal year, a company issues a $5,000,000, 10%, 4-year bond that pays semiannual interest of $250,000 ($5,000,000 × 10% × ½), receiving cash of $5,336,638. Journalize the bond issuance. If an amount box does not require an entry, leave it blank.

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