Barkley Brothers Inc. shows the following information on its balance sheet for December 31, 2010.
The bonds have a stated annual interest rate of 5 percent and will mature on December 31, 2012. The market value of the bonds as of December 31, 2010, is $98,167. Assume that Barkley retired the bonds by purchasing them on the open market. The journal entry to record this purchase would include:
a. a credit to Bonds Payable for $100,000.
b. a debit to Discount on Bonds Payable for $5,350.
c. a credit to Discount on Bonds Payable for $5,350.
d. a debit to Cash for $98,167.

Question

Barkley Brothers Inc. shows the following information on its balance sheet for December 31, 2010.
  The bonds have a stated annual interest rate of 5 percent and will mature on December 31, 2012. The market value of the bonds as of December 31, 2010, is $98,167. Assume that Barkley retired the bonds by purchasing them on the open market. The journal entry to record this purchase would include: 
a. a credit to Bonds Payable for $100,000.
b. a debit to Discount on Bonds Payable for $5,350.
c. a credit to Discount on Bonds Payable for $5,350.
d. a debit to Cash for $98,167.

Quizplus · Accepted Answer

The Answer of Barkley Brothers Inc. shows the following information on its balance sheet for December 31, 2010.
  The bonds have a stated annual interest rate of 5 percent and will mature on December 31, 2012. The market value of the bonds as of December 31, 2010, is $98,167. Assume that Barkley retired the bonds by purchasing them on the open market. The journal entry to record this purchase would include: 
a. a credit to Bonds Payable for $100,000.
b. a debit to Discount on Bonds Payable for $5,350.
c. a credit to Discount on Bonds Payable for $5,350.
d. a debit to Cash for $98,167.