Answer:
Cash A/c Dr. $796,000
Discount A/c Dr. $99,000
To, Interest Revenue 895,000
Explanation:
According to the scenario, computation of the given data are as follows,
Face value = $19.9 million
Issued bond rate = 8% annually or 4% semi annual
So, Cash = $19,900,000 × 4%
= $796,000
Issued bonds value = $17.9 million
Market yield = 10% annual or 5% semi annual
So, Interest revenue = $17,900,000 × 5%
= $895,000
So, Journal entries are as follows,
Jun.30,2021 Cash A/c Dr. $796,000
Discount A/c Dr. $99,000
To, Interest Revenue 895,000
(Being interest revenue on June30 is recorded)
