Premium on Bonds Payable has a normal credit balance,as it increases the carrying value of the bond.

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Premium on Bonds Payable is a contra account to Bonds Payable and has an opposite balance to it. Since Bonds Payable is a liability account with a credit balance, Premium on Bonds Payable has a normal credit balance as it represents an amount paid in excess of the face value of the bond, and thus increases the carrying value of the bond.

Premium on Bonds Payable Has a Normal Credit Balance,as It