Johansen Company issued a bond at a discount.Which of the following shows how the issuance of the bonds affects the elements of the financial statements?

Question

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Issuing a bond at a discount increases assets (cash) for the issue price of the bond and increases liabilities (increase to bonds payable for the face value less increase to contra-liability discount on bonds payable for the discount). It is reported as a cash inflow for financing activities.

Johansen Company Issued a Bond at a Discount