Smith Co. issues 6 %, 10-year bonds with a face amount of $60,000 for $55,736 on

Question

Smith Co. issues 6 %, 10-year bonds with a face amount of $60,000 for $55,736 on January 1, 2012. The market interest rate for bonds of similare risk and maturity is 7%. Interest is paid semiannually on June 30 and December 31. Record the bond issue.

Debit Cash 55,736 and Credit Bonds Payable 55,736.

Debit Cash 60,000 and Credit Bonds Payable 60,000.

Debit Cash 58,049, Debit Interest Expense 1,951 and Credit Bonds Payable 60,000.

Debit Cash 53,785, Debit Interest Expense 1,951 and Credit Bonds Payable 55,736.

Explanation / Answer

Hi,

Please find the answer as follows:

Journal Entry for Bond Issue:

Debit Cash 55,736

Credit Bonds Payable 55,736

Option A is the correct answer.

Thanks.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.