Bonds issued at par - basic concepts

On April 1, year 1, Les Products, Inc. issued at par $5 million of 12%, 10-year bonds payable. Interest is payable semiannually each April 1 and October 1.

(a) What is the amount of cash paid to bondholders for interest during year 1?

$_______________

(b) Give the adjusting entry necessary at December 31, Year 1 (if any), regarding this

bond issue.

(c) Interest expense on this bond issue reported in Les Products' Year 1 income statement is:

$_______________

(d) With respect to this bond issue, Les Products' balance sheet at December 31, Year 1, includes bonds payable of $__________________ and interest payable of $_______________ (indicate $0 or "none" if the item is not reported.

(e) Give the journal entry made by Les Products on April 1, Year 2, to record the semiannual payment of interest to bondholders.