Freeman Corporation issues 2,000, 10-year, 8%, $1,000 bonds dated January 1 at 96. The journal entry to record the issuance will show a
A) debit to Cash for $2,000,000
B) credit to Discount on Bonds Payable for $80,000
C) credit to Bonds Payable for $1,920,000
D) debit to Cash for $1,920,000

Question

Quizplus · Accepted Answer

The correct journal entry to record the issuance of the bonds at 96 (or 96% of the face value) involves debiting Cash for $1,920,000, which is calculated as 2,000 bonds * $1,000 * 96%.

Freeman Corporation Issues 2,000, 10-Year, 8%, $1,000 Bonds Dated January