Pace Company issued at 97 bonds with a face value of $200,000.As a result of the issue:
A)Assets and liabilities would both increase by $200,000.
B)Assets and liabilities would both increase by $194,000.
C)Assets would increase by $194,000 and liabilities would increase by $200,000.
D)Assets would increase by $200,000,and liabilities would increase by $194,000.

Question

Quizplus · Accepted Answer

When bonds are issued at a discount, the assets (cash) increase by the proceeds of the issue, which is less than the face value of the bonds. The liabilities (bonds payable) increase by the face value of the bonds.

Pace Company Issued at 97 Bonds with a Face Value