The Journal Entry to Record a Semiannual Interest Payment on a Bond

question 48

Multiple Choice

The journal entry to record a semiannual interest payment on a bond payable:

• A) debits interest expense and credits bonds payable.
• B) debits interest expense and credits cash.
• C) debits cash and credits interest payable.
• D) debits cash and credits interest expense.

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Definitions:

Interest Expense

Interest expense is the cost incurred by an entity for borrowed funds over a period of time.

Adjusting Entry

An accounting procedure for updating the records of unrecorded expenses or revenues to ensure accurate financial statements.

Straight-Line Amortization

A method of evenly distributing the cost of an intangible asset over its useful life.

Total Interest Cost

The sum of all interest payments over the life of a loan, reflecting the true cost of borrowing.