Four Thousand Bonds with a Face Value of $1000 Each $\begin{array}{llr} \text { Cash } &4,200,000\\ \text { Bonds Payable } &&4,200,000\\\end{array}$

question 56

Short Answer

Four thousand bonds with a face value of $1000 each are sold at 105. The entry to record the issuance isa.
$\begin{array}{llr} \text { Cash } &4,200,000\\ \text { Bonds Payable } &&4,200,000\\\end{array}$

b.
$\begin{array}{llr} \text { Cash } &4,000,000\\ \text { Premium on Bonds Payable } 200,000\\ \text { Bonds Payable } &&4,200,000\end{array}$

c.
$\begin{array}{llr} \text { Cash} &4,200,000\\ \text {Premium on Bonds Payable } &&200,000\\ \text { Bonds Payable} &&4,000,000\end{array}$

d.
$\begin{array}{llr} \text {Cash } &4,200,000\\ \text { Discount on Bonds Payable } &&200,000\\ \text { Bonds Payable } &&4,000,000\end{array}$

---

Definitions:

Capital Balances

The amounts of money that partners or owners have invested in a business, as recorded in the accounts.

Market Prices

The current price at which an asset or service can be bought or sold in a open and competitive market.

Realization

The process of converting non-cash assets into cash or accounts receivable through sales or other means.

Income Sharing Ratio

The proportion or percentage in which partners in a business agree to distribute the profits and losses among themselves.