Question

On October 1, 2020 Bonita Industries issued 5%, 10-year bonds with a face value of $8090000 at 103. Interest is paid on October 1 and April 1, with any premiums or discounts amortized on a straight-line basis. The entry to record the issuance of the bonds would include a credit of $242700 to Premium on Bonds Payable. credit of $202250 to Interest Payable. credit of $7847300 to Bonds Payable. debit of $242700 to Discount on Bonds Payable.

Answer 1

a credit of $242700 to Premium on Bonds Payable

Step-by-step explanation:

Based on the information given The journal entry to record the issuance of the bonds would include a credit of $242700 to Premium on Bonds Payable which is calculated as:

Premium on Bonds Payable=[($8090000*103%)-$8090000

Premium on Bonds Payable=8,332,700-$8090000

Premium on Bonds Payable=$242700

Therefore The entry to record the issuance of the bonds would include a credit of $242700 to Premium on Bonds Payable