A bond was issued at a discount. The journal entry to record the semiannual interest payment would include:

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When a bond is issued at a discount, it means that the bond is sold for less than its face value. Therefore, the interest expense that the issuer of the bond will incur will be more than the interest payment due to the bondholder. To record the semiannual interest payment, the issuer will debit interest expense for the full amount of the interest payment, credit cash for the amount paid, and credit discount on bonds payable to reduce the balance of the bond liability. In this case, Choice B is the best option as it correctly records the interest expense as a debit, credits cash for the payment and credits discount on bonds payable to reduce the carrying amount of the bond liability.

A Bond Was Issued at a Discount