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Journal Entries for Bonds at Par

Lesson
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There are three basic transactions that involve bonds:

  • Issuing a bond
  • Paying the interest on the bond (often yearly)
  • Retiring the bond

This module will let you practice each of the above on a bond sold at face value.

Question Igloos Unlimited, the infamous airplane exporter, sold a bond for $81,000. It pays 7% interest at the end of each year.
What is the journal entry for making an interest payment on the bond?
Answer