Lunar Corporation issues 50,$1,000 maturity value,10% bonds at 95.The journal entry includes a:

Question

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The company receives cash of $47,500 ($1,000 per bond x 50 bonds x 95%), so it should be debited to Cash account. The bonds are issued at a discount of 5% (100% - 95%), so their face value of $50,000 is less than the proceeds received. Therefore, the Bonds Payable account should be credited for $47,500 ($50,000 x 95%). There is no need to record a separate account for Premium on Bonds Payable, as there is no premium in this case.

Lunar Corporation Issues 50,$1,000 Maturity Value,10% Bonds at 95