Question

Novak Corp. issued 2,000 8%, 9-year, $1,000 bonds dated January 1, 2022, at face value. Interest is paid each January 1. (a) Prepare the journal entry to record the sale of these bonds on January 1, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

Answer:

See Explanation

Explanation:

Journal entry to record the sale of the bond -

Cash                                 Debit       2,000,000

      Bonds Payable                  Credit      2,000,000

As the company issued 2,000 bonds with a face value of $1,000 per bond, therefore, 2,000 x $1,000 = $2,000,000 worth bonds have been issued. Novak Corp. will show this payable bond amount in the long-term liabilities of the Balance sheet.