Madrid Company plans to issue 7% bonds on January 1, 2017, with a par value of...

Madrid Company plans to issue 7% bonds on January 1, 2017, with a par value of $5,100,000. The company sells $4,590,000 of the bonds at par on January 1, 2017. The remaining $510,000 sells at par on July 1, 2017. The bonds pay interest semiannually as of June 30 and December 31.

1. Record the entry for the first interest payment on June 30, 2017.

Solutions

Expert Solution

Interest expense = $4,590,000 X 7% X 6/12 = $160,650

Date	Account Titles and Explanation	Debit	Credit
June 30, 2017	Interest expense	$160,650	-
	Cash	-	$160,650
	(To record semiannual interest paid)

ekkarill92 answered 2 years ago

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