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How do you record discounts on bonds payable?

How do you record discounts on bonds payable?

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Answer #1

If the bond is issued at discount then discount on bond payable will be debited at the time of issue.

Journal entry

Cash .........................................................Cash received

discount on bond payable........................XXX discount amount

to Bond payable..........................................Value of bond

When regular interest will be paid on the coupon date discount on bond payable will get amortized using the effective interest rate.

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