Question

On January 1, 2020, Sweetwood Corporation issues $5 million, 10-year, 9% bonds at 96, with interest payable annually on January 1. Which journal entry below should be used to record this transaction on January 1, 2020? (Pick the corresponding letter (a), (b), (c), or (d) for your answer.)

(a) Cash........................................... 5,000,000

               Bonds Payable........................................... 5,000,000

(b) Cash........................................... 4,800,000

               Bonds Payable........................................... 4,800,000

(c) Discount on Bonds Payable..... 200,000

      Cash............................................. 4,800,000

               Bonds Payable......................................... 5,000,000

(d) Cash......................................... 5,000,000

               Bonds Payable.......................................... 4,800,000

               Premium on Bonds Payable................ 200,000

Group of answer choices

a. (b)

b. (d)

c. (c)

d. (a)

Answer 1