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Discuss interest payment using straight-line amortization

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An advantage of bonds is:

Bonds do not affect owner control.Bonds require payment of periodic interest.Bond payments can be burdensome when income and cash flow are low.Bonds can decrease return on equity.Bonds require payment of par value at maturity.

On January 1, a company issues bonds dated January 1 with a par value of $400,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $383,793. The journal entry to record the first interest payment using straight-line amortization

Reference no: EM131758431

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