contestada

The journal entry a company records for the issuance of bonds when the contract rate is greater than the market rate would be
A. debit bonds payable, credit cash
B. debit cash and discount on bonds payable, credit bonds payable
C. debit cash, credit premium on bonds payable and bonds payable
D. debit cash, credit bonds payable

Respuesta :

Answer:

C. debit cash, credit premium on bonds payable and bonds payable

Explanation:

Since the contract rate is greater than the market rate, the bond is issued at a premium. And, the journal entry is shown below:

Cash A/c Dr XXXXX

      To Premium on bonds payable A/c XXXXX

      To Bonds payable A/c XXXXX

(Being bond is issued at a premium is recorded)

When the bond is issued at a premium, we debited the cash account and credited the premium on bonds payable and bonds payable account

Otras preguntas