On January 1, 2008, Boston Enterprises issues bonds that have a 3,400,000 par value, mature in 20 years, and pay 9% interest semiannually on June 30 and December 31. The bonds are sold at par.

How much interest will Boston pay (in cash) to the bondholders every six months?

Prepare journal entries to record:

To determine the amount of interest that Boston Enterprises will pay to the bondholders every six months, we need to calculate the semiannual interest payment based on the bond's interest rate.

The bond's par value is $3,400,000, and it pays a 9% annual interest semiannually. To calculate the semiannual interest payment, we divide the annual interest rate by two:

Annual interest rate = 9%
Semiannual interest rate = 9% / 2 = 4.5%

Next, we multiply the semiannual interest rate by the bond's par value:

Interest payment = Semiannual interest rate * Par value
Interest payment = 4.5% * $3,400,000

Calculating this gives us:

Interest payment = 0.045 * $3,400,000 = $153,000

Therefore, Boston Enterprises will pay a total of $153,000 in cash to the bondholders every six months as interest.

Now, let's prepare the journal entries to record the bond issuance:

1. To record the issuance of bonds at par value:
Bond Payable $3,400,000
Cash $3,400,000

2. To record the first interest payment:
Interest Expense $153,000
Cash $153,000

Note: These are simplified journal entries and may not include all necessary details. It is always recommended to consult with an accountant or financial professional for accurate and complete journal entries.