Arisael Company issued 20-year, $750,000 bonds with a stated rate of interest of 9%, compounded semiannually. The

Question:

Arisael Company issued 20-year, $750,000 bonds with a stated rate of interest of 9%, compounded semiannually. The effective interest rate demanded by investors for bonds of this level of risk is also 9%. Since these bonds are issued at face value (i.e., the stated rate of interest is equal to the interest rate demanded by investors for bonds of this level of risk), the issuance price is also $750,000. Make the necessary journal entries for the following transactions:

1. Issuance of the bonds

2. First interest payment

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...