The journal entry to record $230,000 of bonds that were issued at 98 would be to:

Question

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When bonds are issued at a discount, the cash received from selling the bonds is less than their face value. The discount is recorded as a contra-liability account to the bonds payable account. In this case, since the bonds were issued at 98, the cash received would be $230,000 x 0.98 = $225,400. The entry to record this transaction would be to debit Cash for $225,400 and Discount on bonds payable for $4,600 (which is $230,000 - $225,400). Finally, credit Bonds payable for the full face value of the bonds, which is $230,000.

The Journal Entry to Record $230,000 of Bonds That Were