Table 15-1
Nickle Industries needs to raise capital for expansion purposes. Management is considering issuing $1,000,000 of 7.5%, 20-year bonds dated June 1, 2017 with interest payment dates of December 1 and June 1. Nickle's year end is December 31.
-Refer to Table 15-1.The entry to record the issuance of the bonds on June 1,2017,at 103.375 includes a:

Question

Quizplus · Accepted Answer

The entry to record the issuance of the bonds on June 1, 2017, at 103.375 (which represents a premium of 3.375% above par value) would include a debit to Cash for the total amount received ($1,033,750) and a credit to Bonds Payable for the face value of the bonds ($1,000,000). No premium or discount should be recorded at the issuance date, as it is only calculated and allocated over the life of the bonds.

Table 15-1 Nickle Industries Needs to Raise Capital for Expansion Purposes. Management