Mendez Corporation issues 4,000, 10-year, 8%, $1,000 bonds dated January 1, 2014, at 103. The journal entry to record the issuance will show a

Question

Quizplus · Accepted Answer

The journal entry to record the issuance of bonds is:
Debit: Cash $4,120,000 (4,000 bonds x $1,000 face value x 103%)
Credit: Bonds Payable $4,000,000 (4,000 bonds x $1,000 face value)
Credit: Premium on Bonds Payable $120,000 (4,000 bonds x $1,000 face value x 8% coupon rate x 1/2 year)
Therefore, the correct answer is B.

Mendez Corporation Issues 4,000, 10-Year, 8%, $1,000 Bonds Dated January