The journal entry a company records for the issuance of bonds when the contract rate and the market rate are the same is to
A) debit Bonds Payable, credit Cash
B) debit Cash and Discount on Bonds Payable, credit Bonds Payable
C) debit Cash, credit Premium on Bonds Payable and Bonds Payable
D) debit Cash, credit Bonds Payable

Question

Quizplus · Accepted Answer

When the contract rate and the market rate are the same, the bonds will be issued at par value. Therefore, the journal entry to record the issuance of bonds would be to debit Cash and credit Bonds Payable for the par value of the bonds.

The Journal Entry a Company Records for the Issuance of Bonds