On January 1,Year 1,Bluestone Company issued bonds with a face value of $500,000 at 90.Which of the following journal entries would be required to record the bond issue?

Question

Quizplus · Accepted Answer

Proceeds = Face value of $500,000 × 90% = $450,000
Discount = Face value of $500,000 - Proceeds from issuance of $450,000 = $50,000
The issuance is recorded as a debit (increase)to cash for $450,000,a debit (increase)to discount on bonds payable,a contra liability account,for $50,000,and a credit (increase)to bonds payable of $500,000.

On January 1,Year 1,Bluestone Company Issued Bonds with a Face