If ABC Company issues 100 of its $1,000 bonds at a price of 110,the journal entry to record the transaction includes a:
A)debit to Cash of $100,000.
B)credit to Premium on Bonds Payable of $10,000.
C)debit to Cash of $90,000.
D)debit to Discount on Bonds Payable of $10,000.

Question

Quizplus · Accepted Answer

The journal entry to record the issuance includes a debit to Cash for $110,000 (or $1,000 × 100 × 110%),a credit to Bonds Payable for $100,000 (the face value of the bonds or $1,000 × 100),and a credit to Premium on Bonds Payable for $10,000 (or $110,000 − $100,000).

If ABC Company Issues 100 of Its $1,000 Bonds at a Price