Blanding Company Issues $1,000,000 of 8%,10-Year Bonds at 98 on February

question 40

Multiple Choice

Blanding Company issues $1,000,000 of 8%,10-year bonds at 98 on February 28,2014.The bond pays interest on February 28 and August 31.The market rate of interest on the issuance date was 10%.The journal entry to record the issuance would include a:

• A) debit to Cash for $1,000,000.
• B) credit to Bonds payable for $980,000.
• C) credit to Discount on bonds payable for $20,000.
• D) debit to Cash for $980,000.

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Definitions:

Dielectric

An electric insulator.

Voltage Difference

The difference in electric potential between two points in an electrical circuit.

Dielectric

A non-conducting material that can be polarized by an external electric field, commonly used as an insulating material between conducting surfaces.

Metal Conductors

Materials that allow the flow of electrical current due to their free electron movement.