The entry to record the semiannual payment and amortization of the discount using the straight-line method on a 11%, $500,000, 9-year bond issued at 96 would be to:

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The correct entry involves recognizing both the cash interest payment and the amortization of the bond discount. The bond was issued at 96, implying a 4% discount on its face value of $500,000, which equals $20,000. Over the 9-year term, this discount is amortized using the straight-line method, resulting in an annual amortization of $2,222 ($20,000 / 9 years). Semiannually, this amounts to $1,111 ($2,222 / 2). The semiannual cash interest payment is 5.5% (half of the 11% annual rate) of $500,000, which equals $27,500. Therefore, the total interest expense recognized is the cash payment plus the amortization of the discount, or $27,500 + $1,111 = $28,611.

The Entry to Record the Semiannual Payment and Amortization of the Discount