The Journal Entry to Record $200,000 of Bonds That Were

question 75

Multiple Choice

The journal entry to record $200,000 of bonds that were issued at 104 would be to:

• A)debit Cash,$200,000;credit Bonds payable,$200,000.
• B)debit Cash,$208,000;credit Bonds payable,$208,000.
• C)debit Cash,$208,000;credit Bonds payable,$200,000;credit Premium on bonds payable,$8,000.
• D)debit Cash,$200,000;debit Discount on bonds payable,$8,000;credit Bonds payable,$208,000.

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Definitions:

Equivalent

A term expressing a state of equality or equivalency in value, function, or meaning.

Cash Held

Physical money held by a business in its cash registers or cash box, used for daily operations.

Present Value

The present-day valuation of coming monetary sums or cash flow sequences, upon applying a defined rate of return.

Compounded Annually

The process wherein the interest earned on an investment is added to the principal each year, and in the subsequent year, interest is earned on this new principal.