Bonds with a face amount $1,000,000, are sold at 98. The entry to record the issuance is
A) Cash 1,000,000 Premium on Bonds Payable 20,000
Bonds Payable 980,000
B) Cash 980,000 Premium on Bonds Payable 20,000
Bonds Payable 1,000,000
C) Cash 980,000 Discount on Bonds Payable 20,000
Bonds Payable 1,000,000
D) Cash 980,000 Bonds Payable 980,000

Question

Quizplus · Accepted Answer

The bonds are sold at 98, meaning they are sold at 98% of the face value, which is $980,000. The difference between the face value ($1,000,000) and the cash received ($980,000) is recorded as a Discount on Bonds Payable.

Bonds with a Face Amount $1,000,000, Are Sold at 98