The journal entry used to record the interest payment on December 31, 2014 would be:

Question

Quizplus · Accepted Answer

$35,250 x 3% = $1,057 discount; $1,057/5 years = $212 yearly amortization of discount; $35,250 x 8% = $2,820 annual interest payment; $2,820 + $212 = $3,032 interest expense; The interest payment would be recorded as a debit (increase) to interest expense for $3,032, a credit (decrease) to the contra-liability discount on bonds payable for $212, the amount of the yearly amortization, and a credit (decrease) to cash for $2,820, the amount of the interest payment.

The Journal Entry Used to Record the Interest Payment on December