The adjusting entry to record the amortization of a discount on bonds payable is
A) debit Discount on Bonds Payable, credit Interest Expense
B) debit Interest Expense, credit Discount on Bonds Payable
C) debit Interest Expense, credit Cash
D) debit Bonds Payable, credit Interest Expense

Question

Quizplus · Accepted Answer

The correct adjusting entry to record the amortization of a discount on bonds payable involves debiting Interest Expense and crediting Discount on Bonds Payable. This increases the interest expense reported on the income statement and reduces the discount on bonds payable on the balance sheet, gradually bringing the book value of the bonds closer to their face value over time.

The Adjusting Entry to Record the Amortization of a Discount