On January 1 of 2015, Parson Freight Company issues 8.0%, 10-year bonds with a p

Question

On January 1 of 2015, Parson Freight Company issues 8.0%, 10-year bonds with a par value of $2,700,000. The bonds pay interest semi-annually. The market rate of interest is 9.0% and the bond selling price was $2,516,532. The bond issuance should be recorded as:

A.) Debit Cash $2,516,532; debit Interest Expense $183,468; credit Bonds Payable $2,700,000.

B.) Debit Cash $2,516,532; debit Discount on Bonds Payable $183,468; credit Bonds Payable $2,700,000.

C.) Debit Cash $2,700,000; credit Bonds Payable $2,516,532; credit Discount on Bonds Payable $183,468.

D.) Debit Cash $2,516,532; credit Bonds Payable $2,516,532.

E.) Debit Cash $2,700,000; credit Bonds Payable $2,700,000.

On January 1 of 2015, Parson Freight Company issues 8.0%, 10-year bonds with a par value of $2,700,000. The bonds pay interest semi-annually. The market rate of interest is 9.0% and the bond selling price was $2,516,532. The bond issuance should be recorded as:

Explanation / Answer

Debit Cash $2,516,532; debit Discount on Bonds Payable $183,468; credit Bonds Payable $2,700,000.

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