Samson Enterprises issued a ten-year,$20 million bond with a 10% interest rate for $19,500,000.The entry to record the bond issuance would have what effect on the financial statements?

Question

Quizplus · Accepted Answer

Issuing a bond increases assets because the company receives cash (or other assets) from the bondholders. It also increases liabilities because the company now owes the bondholders the principal amount of the bond plus interest. Therefore, both assets and liabilities increase.

Samson Enterprises Issued a Ten-Year,$20 Million Bond with a 10