Megginson,Inc.issued a five-year corporate bond of $300,000 with a 5% interest rate for $290,000.What effect would the bond issuance have on Megginson,Inc.'s accounting equation?

Question

Quizplus · Accepted Answer

Issuing a bond increases assets (cash) by the amount received ($290,000) and increases liabilities (bonds payable) by the face value of the bond ($300,000), affecting the accounting equation by increasing both assets and liabilities.