Webster Company Issues $1,000,000 Face Value, 6%, 5-Year Bonds Payable

question 200

Multiple Choice

Webster Company issues $1,000,000 face value, 6%, 5-year bonds payable on 31 December 2013. Interest is paid semiannually each 30 June and 31 December. The bonds sell at a price of 97; Webster uses the straight-line method of amortizing bond discount or premium.
-The entry made by Webster Company to record issuance of the bonds payable at 31 December 2013, includes:

• A) A debit to Cash of $1,000,000.
• B) A debit to Discount on Bonds Payable of $30,000.
• C) A credit to Bonds Payable of $970,000.
• D) A credit to Bond Interest Payable of $30,000.

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