The following information applies to both questions
On October 1, 2010 Macklin Corporation issued 5%, 10-year bonds with a face value of $1,000,000 at 108 (a 4% yield).Interest is paid on October 1 and April 1, with any premiums or discounts amortized on an effective-interest basis.
-The entry to record the issuance of the bonds would include a credit of

Question

The following information applies to both questions 
On October 1, 2010 Macklin Corporation issued 5%, 10-year bonds with a face value of $1,000,000 at 108 (a 4% yield).Interest is paid on October 1 and April 1, with any premiums or discounts amortized on an effective-interest basis.
-The entry to record the issuance of the bonds would include a credit of

Quizplus · Accepted Answer

The face value of the bonds is $1,000,000, but they were issued at 108% of face value, which means the company received $1,080,000 ($1,000,000 x 108%). The credit to Bonds Payable should therefore be for the amount received, which is $1,080,000.

The Following Information Applies to Both Questions