Lesson: Bond Issuance at Par

In this lesson, unravel the intricacies of bond issuance at par as Nick Palazzolo, CPA, walks through a practical example involving Stark Inc. issuing ten-year term bonds with no premium or discount. Nick meticulously demonstrates the journal entries necessary at the time of issuance and discusses how to handle the subsequent semi-annual interest payments associated with the bond. He further explains the calculation of interest for partial periods and the procedure for accruing interest expense at the end of the accounting period. Dive deep into the relationship between interest expense on the income statement and interest payable on the balance sheet, enhancing understanding through a visual diagram that breaks down the accrual and payment cycles.