On January 1, Hanley Corporation issued $1,700,000, 10-year, 7% bonds at 101. The journal entry to record this transaction would include a:

Question

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The bonds were issued at 101, which means they were issued at 101% of the face value. The premium is calculated as 1% of $1,700,000, which is $17,000. Therefore, the journal entry would include a credit to Premium on Bonds Payable for $17,000.

On January 1, Hanley Corporation Issued $1,700,000, 10-Year, 7% Bonds