A company sells a bond with a face value of $10,000 and receives a premium of $800.Using simplified effective-interest amortization,what journal entry is used to record the issuance of the bonds?
A)Debit Cash for $10,800 and credit Bonds Payable,Net for $10,800.
B)Debit Cash for $10,800,credit Bonds Payable,Net for $10,000,and credit Premium on Bond Payable for $800.
C)Debit Cash for $10,000,debit Interest Expense for $800,credit Bonds Payable,Net for $10,000,and credit Premium on Bonds Payable for $800.
D)Debit Cash for $10,000,debit Interest Expense for $800,credit Bonds Payable for $10,000,and credit Premium on Bonds Payable for $800.

Question

Quizplus · Accepted Answer

When simplified effective-interest amortization is used,the proceeds from the issuance are recorded in the Cash and Bonds Payable,Net accounts.

A Company Sells a Bond with a Face Value of $10,000