Bonds with a face amount $1,000,000 are sold at 98. The entry to record the issuance is
A) Cash Premium on Bonds Payable
1,000,000
20,000
Bonds Payable
980,000
B) Cash 980,000
Premium on Bonds Payable
20,000
Bonds Payable
1,000,000
C) Cash 980,000
Discount on Bonds Payable Bonds Payable
20,000
1,000,000
D) Cash Bonds Payable
980,000
980,000

Question

Quizplus · Accepted Answer

The bonds are sold at 98, which means they are sold at a discount (98% of face value). The cash received is $980,000, and the discount on bonds payable is $20,000, with bonds payable recorded at the face value of $1,000,000.

Bonds with a Face Amount $1,000,000 Are Sold at 98