On January 1, 2018, Winston Company purchased 5% bonds with a face value of $50,000 for par. Winston Company intends to hold the bonds until maturity. Interest is payable semiannually on July 1 and January 1. The company's fiscal year ends on December 31. The journal entry on July 1, 2018 is:

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The interest payment is calculated as 5% of $50,000, which is $2,500 annually. Since interest is payable semiannually, the payment on July 1 is $1,250.

On January 1, 2018, Winston Company Purchased 5% Bonds with a Face