Question

On January 1, 2021, Twister Enterprises, a manufacturer of a variety of transportable spin rides, issues $590,000 of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year.

Required:
1. If the market interest rate is 8%, the bonds will issue at $590,000. Record the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

• Record the bond issue.
• Record the first semiannual interest payment.
• Record the second semiannual interest payment

Answer 1

Twister Enterprises
Part 1
Journal entries
Date	Account Titles and Explanation	Debit	Credit	Calculation
1-Jan-21	Cash	590,000
	Bonds Payable		590,000
30-Jun-21	Interest expense	23,600		'= 590,000*8%*6/12
	Cash		23,600
31-Dec-21	Interest expense	23,600
	Cash		23,600