A company issues bonds with a $100,000 par value,an 8% annual contract rate,semiannual interest payments,and a five year life.The bonds sold for $107,850.The entry to record the issuance of the bonds will include:

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The bonds were issued at a premium (sold for more than their face value), so the entry to record the issuance of the bonds will include a credit to Premium on Bonds Payable. The entry will also include a debit to Cash for the amount received ($107,850) and a credit to Bonds Payable for the face value of the bonds ($100,000). There is no mention of a discount, so option B is incorrect. Finally, option E is incorrect as it refers to interest expense which would not be recorded until the first semi-annual interest payment is made.

A Company Issues Bonds with a $100,000 Par Value,an 8