On January 1, 2015, the date of issuance, the entry is:
2015
Jan 1
Cash 1,000,000
Bonds Payable 1,000,000
On each January 1 for 5 years, beginning 2015 January 1 (ending 2020 January 1), the entry would be (Remember, calculate interest as Principal x Interest x Time):
Jan 1
Bond Interest Expense ($1,000,000 x 10% x 1) 100,000
Cash 100,000
On January 1 (5 years later), the maturity date, the entry would include the last interest payment and the amount of the bond:
Jan 1
Bond Interest Expense ($1,000,000 x 10% x 1) 100,000
Bonds Payable 1,000,000
Cash 1,100,000
