Bonds with a face amount $1,000,000, are sold at 96. The entry to record the issuance is
A) Cash 1,000,000 Premium on Bonds Payable 40,000
Bonds Payable 960,000
B) Cash 960,000 Premium on Bonds Payable 40,000
Bonds Payable 1,000,000
C) Cash 960,000 Discount on Bonds Payable 40,000
Bonds Payable 1,000,000
D) Cash 960,000 Bonds Payable 960,000

Question

Quizplus · Accepted Answer

The bonds are sold at 96, meaning 96% of the face value, which is $960,000. The difference between the face value ($1,000,000) and the cash received ($960,000) is a discount of $40,000.

Bonds with a Face Amount $1,000,000, Are Sold at 96