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A company issues bonds with a $100,000 par value, an 8% annual contract rate, semiannual interest payments, and a five year life. The bonds sold for $107,850. The entry to record the issuance of the bonds will include: Multiple Choice A credit to Premium on Bonds Payable of $7,850. A debit to Discount on Bonds Payable of $7,850. A credit to Cash of $100,000. A credit to Bonds Payable of $107,850. A debit to Interest Expense of $7,850.

Respuesta :

Answer:

A credit to Premium on Bonds Payable of $7,850

Explanation:

The journal entry to record the issuance of the bond is shown below:

Cash $107,850  

    Premium on bonds payable $7,850

    Bonds payable  $100,000

(Being the issuance of the bond is recorded)

Here cash is debited as it increased the assets and rest of the two accounts are credited as it increased the liabilities

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