The journal entry to record payment of the bond payable at maturity will include a:
A)debit to cash and a credit to bonds payable.
B)debit to bonds payable and credit to cash.
C)debit to bonds payable, debit to discount on bonds payable and a credit to cash.
D)debit to bonds payable, credit to premium on bonds payable and a credit to cash.

Question

Quizplus · Accepted Answer

When the bond payable is paid back at maturity, it is recorded by debiting the bonds payable account to reduce it to zero and crediting the cash account for the amount paid. Therefore, the correct journal entry is a debit to bonds payable and a credit to cash. Option A is incorrect because it has debit cash and credit bonds payable, which is in reverse order. Option C is incorrect because it includes the debit to the discount on bonds payable account, which is only necessary when using the effective interest method to amortize bond discount. Option D is incorrect because it includes the credit to the premium on bonds payable account, which is only necessary when using the effective interest method to amortize bond premium.

The Journal Entry to Record Payment of the Bond Payable