INTEREST PAYMENTS AND INTEREST EXPENSE FOR BONDS

(STRAIGHT LINE)

Klamath Manufacturing sold 10-year bonds with a total face amount of $400,000 and a stated rate of 8.4 percent. The bonds sold for $424,000 on December 31, 2008, and pay interest semiannually on June 30 and December 31.

Required:

. Prepare the entry to recognize the sale of the bonds.

. Determine the amount of the semiannual interest payment required by the bonds.

. Prepare the journal entry made by Klamath at June 30, 2009, to recognize the interest expense and an interest payment.

. Determine the amount of interest expense for 2009.

Exercise