Use the information below to answer the following questions:
Assume that on 1 January 2012 the company issued $100 000 ten-year bonds with a 10% coupon rate paid semi-annually. The bond is issued to yield a 12% return to investors selling for $88 529.
-What would be the debit journal entry to record the sale of the bond on 1 January 2012?

Question

Use the information below to answer the following questions:
Assume that on 1 January 2012 the company issued $100 000 ten-year bonds with a 10% coupon rate paid semi-annually. The bond is issued to yield a 12% return to investors selling for $88 529. 
-What would be the debit journal entry to record the sale of the bond on 1 January 2012?

Quizplus · Accepted Answer

The journal entry to record the sale of the bonds would be DR Cash $88 529 and CR Bonds $88 529. This is because the company received cash of $88 529 from the investors who purchased the bonds, and the par value of the bonds is only $100 000 - this means that the company received less cash than the face value of the bonds, and as a result, the bonds are being sold at a discount.

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