Your company issues $500,000 in bonds at an issue price of 98.The company will record:
A)a debit of $490,000 to cash,a debit of $10,000 to a contra-liability account to reflect the discount,and a credit of $500,000 to bonds payable.
B)a debit of $490,000 to cash,a debit of $10,000 to a contra-asset account to reflect the discount,and a credit of $500,000 to bonds payable.
C)a debit of $500,000 to bonds payable,a credit of $10,000 to a contra-liability account to reflect the discount,and a credit to cash of $490,000.
D)a debit of $490,000 to bonds payable,a debit of $10,000 to a contra-asset account to reflect the discount,and a credit to cash of $500,000.

Question

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The company receives $490,000 in cash (98% of $500,000), records a $10,000 discount on bonds payable as a contra-liability, and credits bonds payable for the full $500,000.

Your Company Issues $500,000 in Bonds at an Issue Price