Safeway Company issued $100,000 of fixed interest rate bonds payable at 98.At year-end,the bonds were selling in the bond market at 99.What entry would Safeway make at year-end to record the change in selling price?
A)Debit Bonds Payable $1,000; credit Interest Expense $1,000.
B)Debit Interest Expense $1,000; credit Bonds Payable $1,000.
C)Debit Investment in Bonds $1,000; credit Investment Revenue $1,000.
D)No entry needed.

Question

Quizplus · Accepted Answer

The change in the market price of the bonds does not affect the accounting records of the issuer, Safeway Company. The bonds payable are recorded at their issuance price, and changes in market value are not recorded in the issuer's financial statements.

Safeway Company Issued $100,000 of Fixed Interest Rate Bonds Payable