The journal entry to establish a bond sinking fund would include:

Question

Quizplus · Accepted Answer

To establish a bond sinking fund, the company would need to set aside funds to pay off the bond at maturity. This can be done by creating a separate fund, which is debited for the amount set aside. This transaction is recorded with a debit to Bond Sinking Fund. It is important to note that there isn't a credit to Bond Sinking Fund because it is an asset account, not a liability account.

The Journal Entry to Establish a Bond Sinking Fund Would