Asked by Dianna Juanes on May 09, 2024
Verified
The journal entry to record the issue of bonds at a discount will include a
A) debit to Cash for the face amount of the bonds.
B) debit to Cash for the face amount of the bonds plus the amount of the discount.
C) debit to Cash for the face amount of the bonds minus the amount of the discount.
D) credit to Cash for the face amount of the bonds.
Use the information below to answer questions 90-91.
Coldwater Inc.issues $575,000 of 4%, 8-year bonds for cash proceeds of $502,774.The market interest rate is 6%.Interest is paid semi-annually.
Bonds at Discount
Bonds issued below their face value, where the difference between the issue price and the face value represents the interest.
Journal Entry
A record in the accounting journal that represents a single transaction and shows the debits and credits to the various accounts affected by the transaction.
- Examine the influence of conditions for issuing bonds on the financial reports, highlighting premium and discount cases.
Verified Answer
ES
elina sanchez alonsoMay 10, 2024
Final Answer :
C
Explanation :
When bonds are issued at a discount, the cash received is less than the face amount of the bonds. Therefore, Cash is debited for the face amount minus the discount, which reflects the actual proceeds received from the bond issuance.
Learning Objectives
- Examine the influence of conditions for issuing bonds on the financial reports, highlighting premium and discount cases.