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12 August, 18:28

Pharoah Company issued $530,000 of 5-year, 5% bonds at 97 on January 1, 2020. The bonds pay interest annually. Your answer is partially correct. Try again. Prepare the journal entry to record the issuance of the bonds

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  1. 12 August, 21:48
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    Dr. Cr.

    Cash $514,100

    Discount on bond payable $15,900

    Bond Payable $530,000

    Explanation:

    Cash is received against the Bond issued is debited due to its debit nature and the bond payable account is credited because it is a liability and its nature is credit.

    Cash Received = (530,000 / 100) x 97 = $514,100

    Discount = (530,000/100) x (100 - 97) = $15,900
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