On January 1, 2015, Carter Corporation issued $5,000,000, 10-year, 8% bonds at 102. Interest is payable annually on January 1. The journal entry to record this transaction on January 1, 2015 is

Question

Quizplus · Accepted Answer

The bonds were issued at 102, meaning 102% of the face value. Therefore, the cash received is $5,100,000 (102% of $5,000,000). The bonds payable is recorded at face value ($5,000,000), and the premium on bonds payable is the difference ($100,000).

On January 1, 2015, Carter Corporation Issued $5,000,000, 10-Year, 8