Clayton Corporation made the following entry in its general journal on 12/31/16:
Which of the following answers describes the above transaction?

A)Clayton records interest expense and amortization of discount on bonds payable.
B)Clayton issues bonds with a face value of $5,400 for $5,000 cash.
C)Clayton records annual interest and amortization of premium on bonds.
D)Clayton redeems callable bonds when the carrying value is $5,400.

Question

Clayton Corporation made the following entry in its general journal on 12/31/16:
Which of the following answers describes the above transaction?

A)Clayton records interest expense and amortization of discount on bonds payable. 
B)Clayton issues bonds with a face value of $5,400 for $5,000 cash. 
C)Clayton records annual interest and amortization of premium on bonds. 
D)Clayton redeems callable bonds when the carrying value is $5,400.

Quizplus · Accepted Answer

The entry recorded interest expense and amortization of discount on bonds payable, indicating that Clayton is paying interest on a bond that was issued at a discount.

Clayton Corporation Made the Following Entry in Its General Journal