Your company issues $500,000 in bonds at a price of 98.The journal entry used to record the issuance will include a debit to:
A)Cash for $490,000,a debit to Discount on Bonds Payable for $10,000,and a credit to Bonds Payable for $500,000.
B)Cash for $490,000,a credit to Discount on Bonds Payable for $10,000,and a credit to Bonds Payable for $500,000.
C)Bonds Payable for $500,000,a credit to Discount on Bonds Payable for $10,000,and a credit to Cash for $490,000.
D)Bonds Payable for $490,000,a debit to Discount on Bonds Payable for $10,000,and a credit to Cash for $500,000.

Question

Quizplus · Accepted Answer

The journal entry used to record the issuance will include a debit to Cash for $490,000 (or the face value of $500,000 × the bond price of 0.98),a debit to Discount on Bonds Payable for $10,000 (the face value of $500,000 − the issue price of $490,000),and a credit to Bonds Payable for $500,000 (the face value).

Your Company Issues $500,000 in Bonds at a Price of 98.The