The journal entry to record the sale of bonds at their par value results in which of the following?
A)An increase in assets and liabilities equal to the par value of the bonds.
B)An increase in assets and liabilities equal to the par value of the bonds and their associated interest payments.
C)An increase in assets equal to the par value of the bonds and an increase in liabilities equal to the bonds' future cash flows.
D)An increase in assets and liabilities equal to the bonds' future cash flows.

Question

Quizplus · Accepted Answer

When bonds are sold at their par value, the company receives cash (an asset) equal to the par value of the bonds, and it records a liability (bonds payable) for the same amount. There is no immediate recognition of interest payments in this entry.

The Journal Entry to Record the Sale of Bonds at Their