The journal entry used to record the issuance of the bond and the receipt of cash would be:

Question

Quizplus · Accepted Answer

Issue price = Face value of $70,500 × 97% = $68,385
Discount = Face value of $70,500 ? Issue price of $68,385 = $2,115
The bond issuance is recorded as a debit (increase)to cash for the issue price of $68,385,a debit (increase)to discount on bonds payable,a contra-liability account,for the discount of $2,115,and a credit (increase)to bonds payable for the face value of the bonds of $70,500.

The Journal Entry Used to Record the Issuance of the Bond