Problem
On July 1, 2016 Omega Company sells $2,000,000 face value of 5% five year bonds which call for semiannual interest payments. The bonds are dated April 1, 2016 so these bonds are issued between interest dates. The market rate at the date of issue is also 10%. For simplicity, use a 360-day year and 3 day months for all calculations.
Record the journal entries for the issuance of the bonds.
Record the journal entries for the first interest payment due on October 1, 2016. Assume that interest has not been accrued at each month end.