When bonds are issued at face value,________.
A) the amount of cash received depends on the amount of bond discount or premium
B) for each interest payment, the amount of Interest Expense equals the amount of cash paid
C) for each interest payment, the amount of Interest Expense depends on the amortization of the bond discount or premium
D) the journal entry to record the issuance of the bonds includes a debit to the Bonds Payable account

Question

Quizplus · Accepted Answer

When bonds are issued at face value, the amount of cash received is equal to the face value of the bonds. Therefore, there is no bond discount or premium to be amortized over the life of the bonds. As a result, for each interest payment, the amount of Interest Expense equals the amount of cash paid. The journal entry to record the issuance of the bonds includes a debit to the Cash account and a credit to the Bonds Payable account for the face value of the bonds.

When Bonds Are Issued at Face Value,________