On January 1,2010,Jacob Issues $800,000 of 9%,13-Year Bonds at a Price

question 4

Multiple Choice

On January 1,2010,Jacob issues $800,000 of 9%,13-year bonds at a price of 96½.Six years later,on January 1,2016,Jacob retires 20% of these bonds by buying them on the open market at 105½.All interest is accounted for and paid through December 31,2015,the day before the purchase.The straight-line method is used to amortize any bond discount or premium. What is the journal entry to record the issuance of the bonds on January 1,2010?

• A)
• \[\begin{array} { | l | r | r | }
• \hline \text { Cash } & \mathbf { 8 0 0 , 0 0 0 } & \\
• \hline \text { Bonds Payable } & & \mathbf { 8 0 0 , 0 0 0 } \\
• \hline
• \end{array}\]
• B)
• \[\begin{array} { | c | r | r | }
• \hline \text { Bonds Payable } & \mathbf { 8 0 0 , 0 0 0 } & \\
• \hline \text { Cash } & & \mathbf { 8 0 0 , 0 0 0 } \\
• \hline
• \end{array}\]
• C)
• \[\begin{array} { | l | r | r | }
• \hline \text { Cash } & \mathbf { 8 0 0 , 0 0 0 } & \\
• \hline \text { Bonds Payable } & & 772,000 \\
• \hline \text { Discount on Bonds Payable } & & \mathbf { 2 8 , 0 0 0 } \\
• \hline
• \end{array}\]
• D)
• \[\begin{array} { | l | r | r | }
• \hline \text { Cash } & 772,000 & \\
• \hline \text { Premium on Bonds Payable } & 28,000 & \\
• \hline \text { Bonds Payable } & & 8 0 0 , 000 \\
• \hline
• \end{array}\]
• E)
• \[\begin{array} { | l | r | r | }
• \hline \text { Cash } & 772,000 & \\
• \hline \text { Discount on Bonds Payable } & 28,000 & \\
• \hline \text { Bonds Payable } & &8 0 0, 000 \\
• \hline
• \end{array}\]

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