Journal entries to record the payment of interest

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Southwest Corporation issued bonds with the following details:

Face value: $600,000
Interest: 9 percent per year payable each December 31
Terms: Bonds dated January 1, 2009, due five years from that date

The annual accounting period ends December 31. The bonds were issued at 104 on January 1, 2009, when the market interest rate was 8 percent. Assuming Southwest Corporation uses effective-interest amortization.

Requirement:

Give the journal entries to record the payment of interest on December 31, 2009 and 2010..

Reference no: EM13135333

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