On 1 January 2014, Davie Services issued $20 000 of 8% debentures that mature in five years. They were sold at discount, for a total of $19 000. On 1 January 2019, when the debentures mature, Davie Services will make the final principal payment. That entry will be which of the following?
A)Debit Debenture discount for $1 000 and credit Cash for $1 000.
B)Debit Debentures payable for $19 000, debit Debenture discount for $1 000 and credit Cash for $19 000.
C)Debit Debentures payable for $19 000 and credit Cash for $1 000.
D)Debit Debentures payable for $20 000 and credit Cash for $20 000.

Question

Quizplus · Accepted Answer

The debentures payable account is debited for the full face value of $20,000, and cash is credited for the same amount to reflect the repayment of the principal at maturity.

On 1 January 2014, Davie Services Issued $20 000 of 8