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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. 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
Expert Solution
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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