Blanding Company issues $1,000,000 of 8%, 10-year bonds at 98 on February 28, 2014. The bonds pay interest on February 28 and August 31. The journal entry to record the issuance would include a:
A)debit to Cash for $1,000,000.
B)credit to Bonds Payable for $980,000.
C)credit to Discount on Bonds Payable for $20,000.
D)debit to Cash for $980,000.

Question

Quizplus · Accepted Answer

The bonds are issued at 98, meaning they are issued at 98% of the face value. Therefore, the cash received is $980,000 (98% of $1,000,000).

Blanding Company Issues $1,000,000 of 8%, 10-Year Bonds at 98