The Kaplan Group sold $200,000 of 10-year bonds for $190,000.The face rate on the bonds was 8% and interest is paid annually on December 31.What entry will be made on December 31 when the interest is paid? (Numbers are omitted.)

Question

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The bonds were sold at a discount, so the interest expense will include both the cash interest payment and the amortization of the discount. The entry will debit interest expense, credit cash for the interest payment, and credit discount on bonds payable for the amortization of the discount.

The Kaplan Group Sold $200,000 of 10-Year Bonds for $190,000