Answer:
Journal entries on January 1,year 1:
Dr Cash $180,000
Cr bonds payable $180,000
Journal entries on 31st December year 1:
Dr interest expense $10,800
Cr Cash $10,800
Journal entries on 31st December year 2:
Dr interest expense $10,800
Cr Cash $10,800
Explanation:
Since the bonds were issued at par ,it means the cash realized from the issuance is $180,000 which would debited to cash account and credited to bonds payable account.
On 31st December ,year 1 the first interest is paid which is calculated thus:
$180,000*6%=$10,800
The $10,800 is debited to interest expense account and credited to cash(or to interest payable if cash is not paid immediately)
On 31st December ,year 2 the first interest is paid which is calculated thus:
$180,000*6%=$10,800
The $10,800 is debited to interest expense account and credited to cash(or to interest payable if cash is not paid immediately)
