On January 1,a Company Issues Bonds Dated January 1 with a Par

question 197

Multiple Choice

On January 1,a company issues bonds dated January 1 with a par value of $400,000.The bonds mature in 5 years.The contract rate is 7%,and interest is paid semiannually on June 30 and December 31.The market rate is 8% and the bonds are sold for $383,793.The journal entry to record the issuance of the bond is:

• A)Debit Cash $400,000; credit Discount on Bonds Payable $16,207; credit Bonds Payable $416,207.
• B)Debit Cash $383,793; debit Discount on Bonds Payable $16,207; credit Bonds Payable $400,000.
• C)Debit Bonds Payable $400,000; debit Bond Interest Expense $16,207; credit Cash $416,207.
• D)Debit Cash $383,793; debit Premium on Bonds Payable $16,207; credit Bonds Payable $400,000.
• E)Debit Cash $383,793; credit Bonds Payable $383,793.

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