On January 1,Year 1,Bluestone Company issued bonds with a face value of $500,000 at 90.How will this transaction affect Bluestone company's cash account?

Question

Quizplus · Accepted Answer

Proceeds = Face value of $500,000 × 90% = $450,000
Discount = Face value of $500,000 ? Proceeds from issuance of $450,000 = $50,000
The issuance will increase cash by $450,000, increase discount on bonds payable, a contra liability account, by $50,000, and increase bonds payable by $500,000.

On January 1,Year 1,Bluestone Company Issued Bonds with a Face