Yanik Corporation issues 5,000, 10-year, 8%, $1,000 bonds dated January 1, 2020, at 97.The journal entry to record the issuance will show a
A)debit to Cash of $5,000,000.
B)debit to Discount on Bonds Payable for $150,000.
C)credit to Bonds Payable for $4,850,000.
D)credit to Cash for $4,850,000.

Question

Quizplus · Accepted Answer

The bonds are issued at 97, meaning they are issued at 97% of their face value. The discount on bonds payable is the difference between the face value ($5,000,000) and the cash received ($4,850,000), which is $150,000.

Yanik Corporation Issues 5,000, 10-Year, 8%, $1,000 Bonds Dated January