On January 1 of 2015,Parson Freight Company Issues 7%,10-Year Bonds

question 37

Multiple Choice

On January 1 of 2015,Parson Freight Company issues 7%,10-year bonds with a par value of $2,000,000.The bonds pay interest semi-annually.The market rate of interest is 8% and the bond selling price was $1,864,097.The bond issuance should be recorded as:

• A)Debit Cash $2,000,000;credit Bonds Payable $2,000,000.
• B)Debit Cash $1,864,097;credit Bonds Payable $1,864,097.
• C)Debit Cash $2,000,000;credit Bonds Payable $1,864,097;credit Discount on Bonds Payable $135,903.
• D)Debit Cash $1,864,097;debit Discount on Bonds Payable $135,903;credit Bonds Payable $2,000,000.
• E)Debit Cash $1,864,097;debit Interest Expense $135,903;credit Bonds Payable $2,000,000.