Answer:
Cash 2,839,000 debit
discount on BP 151,000 debit
Bonds Payabl*e 2,990,000 credit
--to record bonds issuance--
interest expense 275,140 debit
discount on BP 6,040 credit
cash 269,100 credit
--to record interest payment--
Explanation:
We will cacualte the cash outlay per interest paymenr
2,990,000 x 9% = 269,100 cash outlay
Then, we divide the discount over the life of the bond to knwo the depreciation:
amortization 151,000 / 25 = 6040
interest expense: 269,100 + 6040 = 275,140
As both, the amortization and cash putlay are fixed th interest entry repeats it selft each year.
