Question - On January 1, 2015 , the Tennyson Co. issued $300,000 of 20-year bonds that pay 8% interest semiannually on June 30 and December 31. The bonds were sold to investors at their par value.
a. How much interest will the issuer pay to the holders of these bonds every six months?
b. Show the journal entries that the issuer would make to record (1) the issuance of the bonds on January 1, 2015, (2) the first interest payment on June 30, 2015, and (3) the second interest payment on December 31, 2015.
Assume instead that Tennyson Co. had sold the above bonds on March 1st at their par value plus two months' accrued interest.
c. How much accrued interest was pain to the issuer by the purchasers of these bonds on March 1, 2015?
d. Show the journal entries that the issuer would make to record (1) the issuance of the bonds on March 1, 2015; (2) the first interest payment on June 30, 2015; and (3) the second interest payment on December 31, 2015.