On January 1, 2010, Jacob Issues $800,000 of 9%, 13-Year $\begin{array} { | c | r | r | } \hline \text { Cash } & 800,000 & \\\hline \text { Bonds Payable } & & 800,000 \\\hline\end{array}$

question 26

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)\(\begin{array} { | c | r | r | }
• \hline \text { Cash } & 800,000 & \\
• \hline \text { Bonds Payable } & & 800,000 \\
• \hline
• \end{array}\)
• B)\(\begin{array} { | c | r | r | }
• \hline \text { Bonds Payable } & 800,000 & \\
• \hline \text { Cash } & & 800,000 \\
• \hline
• \end{array}\)
• C)\(\begin{array} { | l | r | r | }
• \hline \text { Cash } & 800,000 & \\
• \hline \text { Bonds Payable } & & 772,000 \\
• \hline \text { Discount on Bonds Payable } & & 28,000 \\
• \hline
• \end{array}\)
• D)\(\begin{array} { | l | r | r | }
• \hline \text { Cash } & 772,000 & \\
• \hline \text { Premium on Bonds Payable } & 28,000 & \\
• \hline \text { Bonds Payable } & & 800,000 \\
• \hline
• \end{array}\)
• E)\(\begin{array} { | l | r | r | }
• \hline \text { Cash } & 772,000 & \\
• \hline \text { Discount on Bonds Payable } & 28,000 & \\
• \hline \text { Bonds Payable } & & 800,000 \\
• \hline
• \end{array}\)

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