A company issued $500,000, 8%, 10-year bonds at a time when the market rate was 9%. Interest paid annually and the bonds were issued at $467,911. Which part of the journal entry is used to record the issuance of the bonds?

• Debit Bonds payable for $500,000
• Debit cash for $500,000
• Debit cash for $467,911
• Debit Bonds payable for $467,911

A municipality issued a 20-year bond. At the time of the issue, the interest rate that the bond was paying was greater than the market interest rate. The bond has now matured and the municipality is redeeming the bond. What is a characteristic of this transaction?

• Face value will be greater than fair value.
• Carrying amount will equal the face amount.
• Gain must be calculated.
• Cost of issue must be included.

Answer rating: 100% (QA)

Part 1 Par value of bonds 500000 Issue price of bonds 467911 Discount on bon... View the full answer