The journal entry to record $200,000 of bonds that were issued at 97 would be to:

Question

Quizplus · Accepted Answer

When bonds are issued at a price lower than their face value, a discount on bond payable account is created. In this journal entry, the cash received from issuing the bonds is first debited for the net amount, which is the face value minus the discount ($200,000 x 0.97 = $194,000). Then, the discount on bonds payable account is debited for the amount of the discount ($200,000 - $194,000 = $6,000), and the bonds payable account is credited for the full face value of the bonds ($200,000).

The Journal Entry to Record $200,000 of Bonds That Were