The journal entry to record the issue of bonds at a discount will include a
A)debit to Cash for the face amount of the bonds.
B)debit to Cash for the face amount of the bonds plus the amount of the discount.
C)debit to Cash for the face amount of the bonds minus the amount of the discount.
D)credit to Cash for the face amount of the bonds.
Use the information below to answer questions 111-113.
Sail and Sink Inc.issues $425,000 of 6%, 5-year bonds for cash proceeds of $390,529.The market interest rate is 8%.Interest is paid semi-annually.

Question

Quizplus · Accepted Answer

The journal entry to record the issue of bonds at a discount will include a debit to Cash for the face amount of the bonds minus the amount of the discount. In this case, the face amount of the bonds is $425,000, but they were sold for cash proceeds of $390,529. The difference of $34,471 is the amount of the discount. Therefore, the journal entry would be:
Debit Cash for $390,529
Debit Discount on Bonds for $34,471
Credit Bonds Payable for $425,000

The Journal Entry to Record the Issue of Bonds at a Discount