Question
If in January 2012 an entity makes a semiannual interest payment of $3,000 to cover the last six months of 2011, this interest expense should
If in January 2012 an entity makes a semiannual interest payment of $3,000 to cover the last six months of 2011, this interest expense should be recognized in 2011. The journal entry to record the unpaid interest that was an expense in 2011 is as follows:
Complete the journal entry and sentence below.
In 2012, when this interest was paid to the bondholders, the following entry would be made:
DR:
CR:
As the above entries indicate, on the balance sheet, at any given time, the liability for the principal payment is the total face value of the bond, but the interest liability is the: ___________
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