Johansen Company issued a bond at a discount. Which of the following choices accurately reflects how the issue would affect Johansen's financial statements?

Question

Quizplus · Accepted Answer

Issuing a bond at a discount increases assets (cash) for the issue price of the bond and increases liabilities (increase to bonds payable for the face value less increase to contra-liability discount on bonds payable for the discount). It is reported as a cash inflow for financing activities.

Johansen Company Issued a Bond at a Discount