On January 1, 2021, for $18.3 million, Sunset Cliffs Co. issued 10% bonds, dated January...
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Accounting
On January 1, 2021, for $18.3 million, Sunset Cliffs Co. issued 10% bonds, dated January 1, 2021, with a face amount of $20.3 million. For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31. The journal entry to record interest on December 31, 2021, would include:
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Credit discount on bonds payable $93,280
Debit discount on bonds payable $87,980
Credit discount on bonds payable $87,980
Credit discount on bonds payable $92,220
Debit interest expense $1,015,000
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