Answer:
The journal entry is as follows:
Interest expense $961,388.00
Discount on issue of bond $61,388.00
Cash $900,000.00
Explanation:
In order to prepare the journal entry we have to calculate first the interest expense and the cash.
Therefore, Interest expense= ($19,227,757×10%×6/12)=$961,388.00
Cash=$20,000,000×9%×6/12= $900,000
By difference then, the discount on bond payable=$961,388-$900,000
=$61,388.
Hence, the journal entry is as follows:
Interest expense $961,388.00
Discount on issue of bond $61,388.00
Cash $900,000.00
