Question

In: Accounting

On January 1, a company issues bonds dated January 1 with a par value of $330,000....

On January 1, a company issues bonds dated January 1 with a par value of $330,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 10% and the bonds are sold for $317,254. The journal entry to record the issuance of the bond is:

Multiple Choice

  • Debit Cash $317,254; debit Discount on Bonds Payable $12,746; credit Bonds Payable $330,000.

  • Debit Cash $330,000; credit Discount on Bonds Payable $12,746; credit Bonds Payable $317,254.

  • Debit Bonds Payable $330,000; debit Bond Interest Expense $12,746; credit Cash $342,746.

  • Debit Cash $317,254; debit Premium on Bonds Payable $12,746; credit Bonds Payable $330,000.

  • Debit Cash $317,254; credit Bonds Payable $317,254.

Solutions

Expert Solution

The entry would be

Cash 317254
Discount on bonds payable 12,746
Bonds payable 330,000

Option A

ekkarill92 answered 1 year ago
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