The Glenn Corporation issues 1,000, 10-year, 8%, $2,000 bonds dated January 1 at 96. The journal entry to record the issuance will show a
A) debit to Discount on Bonds Payable for $80,000
B) debit to Cash of $2,000,000
C) credit to Bonds Payable for $1,920,000
D) credit to Cash for $1,920,000

Question

Quizplus · Accepted Answer

Discount on Bonds Payable = Face value of bond - Cash received from the issuance of bonds = ($2,000 × 1,000) - ($2,000 × 1,000 × 0.96) = $2,000,000 - $1,920,000 = $80,000
The journal entry to record the issuance will show a debit to Discount on Bonds Payable for $80,000.

The Glenn Corporation Issues 1,000, 10-Year, 8%, $2,000 Bonds Dated