Answer:
1.Dr Interest expense $8million
Cr Cash $8 million
2.Dr Interest expense $8 million
Cr Cash 8 million
3. Dr Bonds Payable $12million
Cr Adjustment in fair value $12 million
Explanation:
Preparation of Journal entries
1) June 30, 2021 Preparation of Journal entry for interest payment
Dr Interest expense $8million
Cr Cash $8 million
[($200 million * 8%) *6/12]
The reason why it was multipled with 6/12 was because the payments are half yearly.
2) Dec 31, 2021 Preparation of Journal entry for interest payment
Dr Interest expense $8 million
Cr Cash 8 million
[($200 million * 8%) *6/12]
3) Dec 31, 2021 Preparation of Fair value adjustment
Dr Bonds Payable $12million
Cr Adjustment in fair value $12 million
($200 million - $188 million)
