Maybelline Corporation issues $3,200,000, 10-year, 7% bonds dated January 1 at 103. The journal entry to record the issuance will include a:

Question

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The bonds are issued at 103, which means they are issued at 103% of the face value. The premium is calculated as 3% of $3,200,000, which is $96,000. Therefore, there will be a credit to Premium on Bonds Payable for $96,000.

Maybelline Corporation Issues $3,200,000, 10-Year, 7% Bonds Dated January 1