On the maturity date of bonds payable after interest has been paid, the issuing company will do which of the following?
A) Pay bondholders the original amount the bondholders paid to purchase the bonds.
B) Debit Cash and credit Bonds Payable for the carrying amount of the bonds.
C) Record a loss of the market rate of interest on the maturity date exceeds the stated rate of interest.
D) Debit Bonds Payable and credit Cash for the par value of the bonds.

Question

Quizplus · Accepted Answer

On the maturity date of bonds payable after interest has been paid, the issuing company will typically debit Bonds Payable and credit Cash for the par value (or face value) of the bonds. This represents the payment of the principal amount of the bonds to the bondholders. The carrying amount of the bonds (which may be different from the par value due to any premium or discount on the bonds) will be eliminated from the balance sheet at this time. Options A and C are not correct because they do not accurately describe what typically occurs on the maturity date. Option B is not entirely incorrect, but it does not fully capture the transaction of paying off the bonds on the maturity date.

On the Maturity Date of Bonds Payable After Interest Has