The Miracle Corporation issues 1,000, 10-year, 8%, $1,000 bonds dated January 1, 2011, at 96. The journal entry to record the issuance will show a
A) debit to Discount on Bonds Payable for $40,000.
B) debit to Cash of $1,000,000.
C) credit to Bonds Payable for $960,000.
D) credit to Cash for $960,000.

Question

Quizplus · Accepted Answer

The bonds are issued at 96, meaning 96% of the face value. The discount is $40,000 (4% of $1,000,000), which is debited to Discount on Bonds Payable.

The Miracle Corporation Issues 1,000, 10-Year, 8%, $1,000 Bonds Dated