It offsets next year's interest income. Make yourself a carryover note.

Theoretically you are supposed to match up each payment with the particular bond.

So do I make a separate interest income entry for each bond and then adjust each one?

I don't.

I make one  entry for this year's offset but my workpapers have it by bond.

I make a carryover schedule for next year's offset.

Thank you

You're welcome.