Schlitterbahn Waterslide Company issued 34,000, 10-year, 7 percent, $100 bonds on January 1 at face value. Interest is payable each December 31. (a) The issuance of these bonds on January 1. (b) The first interest payment on December 31.

The journal entries are shown below:

On January 1

Cash A/c Dr $3,400,000 (34,000 * $100)

To Bonds payable A/c 3,400,000

(Being issuance of the bond is recorded)

On December 31

Interest expense A/c Dr $238,000 ($3,400,000 * 7%)

To Cash A/c $238,000

(Being interest payment is recorded)