On June 1,Roberts Inc.issued bonds with a par value of $100,000.The bonds mature in 5 years and pay 12% annual interest,payable each June 30 and December 31.The bonds sell at par value plus interest accrued since January 1.How would the company record the issuance of the bonds on June 1?
A)Debit Cash for $100,000 and credit Bonds Payable for $100,000.
B)Debit Cash for $105,000 and credit Bonds Payable for $105,000.
C)Debit Cash for $101,000 and credit Bonds Payable for $101,000.
D)Debit Cash for $105,000,credit Bonds Payable for $100,000,and credit Interest Payable for $5,000.
E)Debit Cash for $101,000,credit Bonds Payable for $100,000,and credit Interest Payable for $1,000.

Question

Quizplus · Accepted Answer

The bonds sell at par value plus interest accrued since January 1. So, the company would record the issuance of the bonds on June 1 by debiting Cash for $105,000, crediting Bonds Payable for $100,000, and crediting Interest Payable for $5,000.