A bond issue of $500,000 selling at 100, would require a journal entry including a

Question

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When a bond issue is sold, the company receives cash from the investors in exchange for the bonds. Therefore, the entry would include a debit to Cash for $500,000. However, because the bonds are being sold at 100 (par value), there is no premium or discount on the bonds. The entire amount received (in this case, $500,000) is recorded as the face value of the Bonds Payable account. Thus, the entry would include a credit to Bonds Payable for $500,000.

A Bond Issue of $500,000 Selling at 100, Would Require