Question

The Freeman Corporation issues 2,000, 10-year, 8%, $1,000 bonds dated January 1 at 96. The journal entry to record the issuance will show a:___.
a. debit to Cash of $2,000,000.
b. credit to Discount on Bonds Payable for $80,000.
c. credit to Bonds Payable for $1,920,000.
d. debit to Cash for $1,920,000.

Answer 1

Answer:

d. debit to Cash for $1,920,000

Explanation:

                                    Journal entry

Date   Account titles and Explanation     Debit              Credit

           Cash                                              $1,920,000

           (2,000*$1,000*0.96)

           Discount on Bonds Payable     $80,000

           (2,000*$1,000*0.04)

                    Bonds Payable                                            $2,000,000