Question

The entry to record the issuance of 100, $1,000 bonds for 98.00 includes a.:

1) Debit to Cash for $98,000 and Credit to Bonds Payable for $98,000
2) Debit to Cash for $100,000 and Credit to Bonds Payable for $100,000
3) Debit to Cash for $98,000 and Credit to Bonds Payable for $100,000
4) Debit to Cash for $100,000 and Credit to Bonds Payable for $98,000

Answer 1

The entry to record the issuance of 100, $1,000 bonds for 98.00 includes a debit to Cash for $98,000 and a credit to Bonds Payable for $100,000.

Step-by-step explanation:

The entry to record the issuance of 100, $1,000 bonds for 98.00 includes:

1. Debit to Cash for $98,000 and Credit to Bonds Payable for $100,000

When a company issues bonds, it receives cash from investors who are purchasing the bonds. The company increases its cash balance by debiting the Cash account for the total amount received. At the same time, the company recognizes a liability for the bonds issued, known as Bonds Payable. The credit to Bonds Payable represents the face value of the bonds, which in this case is $100,000.