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Homework answers / question archive / Two thousand bonds with a face value of $1,000 each are sold at 97

Two thousand bonds with a face value of $1,000 each are sold at 97

Accounting

Two thousand bonds with a face value of $1,000 each are sold at 97. The entry to record the issuance is:

a. Cash                 2,000,000

                Discount on Bonds Payable                           60,000                                                             Bonds Payable                                       1,940,000

b. Cash                                   1,940,000

            Discount on Bonds Payable    60,000

               Bonds Payable                                     2,000,000

c.   Cash                                   1,940,000

               Bonds Payable                                     1,940,000

d. Cash                                   2,060,000

                Discount on Bonds Payable                               60,000                                                     Bonds Payable                                             2,000,000

 

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Answer:

b .

Step-by-Step explanation

The bond is issued at a discount of $30, the journal; entry to record the bond issued at discount is as follows:

Cash account-------------------------Debit--------------$1,940,000 (2,000 ?×? $970)

Discount on bonds payable------Debit------------------$60,000 (2,000 ?×? $30)

Bonds payable----------------------Credit--------------$2,000,000 (2,000 ?×? $1,000)

Note: The bond bond is sold at $970.

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