Prepare the journal entries for the first interest payment

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Reference no: EM131932993

Problem

Omega Company sells $2,000,000 face value of 5% five year bonds at 101 which call for semiannual interest payments. The bonds are dated April 1, 2016 so these bonds are issued on an interest date. Use the straight line method of amortization of any bond premium or discount. For simplicity, use a 360-day year and 30 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.

Reference no: EM131932993

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