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May Corporation issues $2,700,000, 10-year, 10% bonds dated January 1 at 93. The journal entry to...

May Corporation issues $2,700,000, 10-year, 10% bonds dated January 1 at 93. The journal entry to record the issuance will include a:

debit to Cash for $2,700,000.

debit to Discount on Bonds Payable for $189,000.

credit to Cash for $2,511,000.

credit to Bonds Payable for $2,511,000.
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Homework Answers

Answer #1

Par value of bonds = $2,700,000

Issue price = 93

Cash proceeds from issue of bonds = Par value of bonds x Issue price

= 2,700,000 x 93%

= $2,511,000

Discount on issue of bonds = Par value of bonds- Cash proceeds from issue of bonds

= 2,700,000-2,511,000

= $189,000

Below mentioned journal entry need to be record:

Date General Journal Debit Credit
January 1 Cash $2,511,000
Discount on bonds payable $189,000
Bonds payable $2,700,000
( To record issuance of bonds at discount)

The journal entry to record the issuance will include a debit to Discount on Bonds Payable for $189,000.

second option is correct.

Please give a positive rating if you are satisfied with this solution and if you have any query kindly ask.

Thanks!!!

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