Molina Corporation issues 5,000, 10-year, 8%, $1,000 bonds dated January 1, 2020, at 103.The journal entry to record the issuance will show a
A)debit to Cash of $5,000,000.
B)debit to Premium on Bonds Payable for $150,000.
C)credit to Bonds Payable for $5,000,000.
D)credit to Cash for $5,150,000.

Question

Quizplus · Accepted Answer

The bonds are issued at a premium, which means that the proceeds from the issuance exceed the face value of the bonds. The premium is recorded as a credit to Premium on Bonds Payable. The journal entry to record the issuance of the bonds is:Debit: Cash $5,150,000Credit: Bonds Payable $5,000,000Credit: Premium on Bonds Payable $150,000

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