Question

Larkspur, Inc. issues $273,000, 10-year, 8% bonds at 98. Prepare the journal entry to record the sale of these bonds on March 1, 2022. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

Answer: PLease see answer in explanation column

Explanation:

Journal to record  $273,000worth bonds issued at 98

Date                Account title and explanation       Debit          Credit

March 1, 2022         Cash                                   $267,540

                       Discount on Bonds Payable       $5,460  

                              Bonds Payable                          $273,000

Calculation

Cash = Value of bonds  x issue price

= $273,000 x 98%= 267,540

 Discount on Bonds Payable = Selling price of bonds - Bonds payable

= $273,000- $267,540

=$5,460