Pretzelmania, inc., issues 7%, 15-year bonds with a face amount of $70,000 for $63,948 on january 1, 2021. the market interest rate for bonds of similar risk and maturity is 8%. interest is paid semiannually on june 30 and december 31.record the bond issue and first interest payment on june 30, 2021. (if no entry is required for a particular transaction/event, select "no journal entry required" in the first account field. round your intermediate computations and final answers to the nearest whole dollar amount.)

The journal entry will be

Debit Cash A/c $63,948

Debit Discount on bonds payable $6,052

Credit Bonds payable $70,000

(Being the issuance of the bond is recorded)

Debit Interest expense  $2,558

Debit Discount on bonds payable $108

Credit Cash A/c $2,450

(Being the first interest payment is recorded

Based on the information given, it should be noted that the interest expense is calculated as:

= ($63,948 × 8% × 6 months) / 12

= $2,558

For the cash account, it's calculated as:

= ($70,000 × 7% × 6 months) / 12

= $2,450

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1. Cash A/c Dr $63,948

Discount on bonds payable A/c $6,052

     To Bonds payable A/c $70,000

(Being the issuance of the bond is recorded)

2. Interest expense A/c Dr  $2,558

          To Discount on bonds payable A/c $108

          To Cash A/c $2,450

(Being the first interest payment is recorded)

Explanation:

The journal entries are shown below:

1. Cash A/c Dr $63,948

Discount on bonds payable A/c $6,052

     To Bonds payable A/c $70,000

(Being the issuance of the bond is recorded)

2. Interest expense A/c Dr  $2,558

          To Discount on bonds payable A/c $108

          To Cash A/c $2,450

(Being the first interest payment is recorded)

The computation is shown below:

For interest expense

= $63,948 × 8% × 6 months ÷ 12 month

= $2,558

For cash A/c

= $70,000 × 7% × 6 months ÷ 12 month

= $2,450

since the options are not listed, when you are working on your budget you should also add water, tv, internet, miscellaneous and your 'fun' money for in your budget. when budgeting, you need to allow for fun money, and mis/accidental money so that you stick to the budget and not go crazy because you feel strapped to the budget.