Answer:
If Interest is not Paid yet
Nantucket Ferry
Dr. Interest Expense $840,000
Cr. Interest payable $840,000
BankOne
Dr. Interest receivable $840,000
Cr. Interest Income $840,000
If Interest is Paid
Nantucket Ferry
Dr. Interest Expense $840,000
Cr. Cash $840,000
BankOne
Dr. Cash $840,000
Cr. Interest Income $840,000
Explanation:
Amount of interest is the expense for Nantucket Ferry and Income for the BankOne on the bond.
As per given data
Amount borrowed = $14,000,000
Coupon rate = 6%
Interest in paid on and received on the bnd is calculated by using the face value and coupon rate of the bond.
Coupon Payment = $14,000,000 x 6% = $840,000
$840,000 will be paid annually to the Bank one.
