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.

Question

Quizplus · Accepted Answer

When bonds are issued at a discount, the cash received will be less than the face value of the bonds. Therefore, the journal entry will include a debit to Cash for the face amount of the bonds minus the amount of the discount. This is because the discount is treated as an additional cost of borrowing and is recorded as a liability on the balance sheet.

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