The town of Liberty approved the construction of a special oven to cook the world's largest apple pie, to be financed by 6% serial bonds. Interest is paid on Jan 1 and July 1 each year. Principal payments are made on Jan 1 each year. Any premium is amortized using straight-line over the 10-year life of the bonds.
On May 1, Liberty issued $1,000,000 of the bonds at 104 plus accrued interest. Only the par value is authorized to be used for construction. All other funds raised must be used to service the debt.
Provide fund and gwide entries.
Ending balance for bond payable.
How much interest expense is recognized in the current year?