Dunphy Company issued $10,000 of 6%, 10-year bonds at par value on January 1. Interest is paid semiannually each June 30 and December 31. Prepare the entries for (a) the issuance of the bonds (b) the first interest payment on June 30.

The journal entries are as follows:

(a) On January 1,

Cash A/c Dr. $10,000

    To bonds payable     $10,000

(To record the issuance of the bonds)

(b) On June 30,

Interest Expense A/c  Dr. $300

        To cash A/c                        $300

(To record the first interest payment on June 30)

Workings:

Interest expense:

= Amount of bonds issued × Time period × Interest rate

= $10,000 × (6/12) × 6%

= $300

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