The journal entry a company records for the issuance of bonds when the contract rate and the market rate are the same is
A) debit Bonds Payable, credit Cash
B) debit Cash and Discount on Bonds Payable, credit Bonds Payable
C) debit Cash, credit Premium on Bonds Payable and Bonds Payable
D) debit Cash, credit Bonds Payable

Question

Quizplus · Accepted Answer

When a company issues bonds with a contract rate and a market rate that are the same, it means that the bonds are issued at par value (the same as the face value). Therefore, the journal entry would be a simple debit to Cash and a credit to Bonds Payable for the face value of the bonds.

The Journal Entry a Company Records for the Issuance of Bonds