On January 1, a company issues bonds dated January 1 with a par value of $400,000....

On January 1, a company issues bonds dated January 1 with a par value of $400,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $383,793. The journal entry to record the issuance of the bond is:

a. Debit Cash $383,793; debit Discount on Bonds Payable $16,207; credit Bonds Payable $400,000.

b. Debit Bonds Payable $400,000; debit Bond Interest Expense $16,207; credit Cash $416,207.

c. Debit Cash $383,793; debit Premium on Bonds Payable $16,207; credit Bonds Payable $400,000.

d. Debit Cash $383,793; credit Bonds Payable $383,793.

e. Debit Cash $400,000; debit Discount on Bonds Payable $16,207; credit Bonds Payable $416,207.

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ekkarill92 answered 1 year ago

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