On June 1, 2016, Alpha Corporation issued $300,000 of 9%, 5-year bonds. The bonds which were issued at 97, pay interest on January 1 and June 1. Use this information to prepare the General Journal entry (without explanation) to record the June 1, 2016 bond issue.
Bonds Payable are typically debt securities and classified in the balance sheet as non-current liabilities up to its maturity date. Bonds are one of the ways to raise cash through debt financing and most of the corporations are even governments used bonds and sell to prospective investors.
Answer and Explanation:
|Cash (300,000 * 97)||291,000|
|Discount on Bonds Payable||9,000|
The bonds are issued at a discount, hence the bond issuer will receive less than the bond's par value.
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from Accounting 101: Financial AccountingChapter 10 / Lesson 7