Question

A company issued $100,000, 5-year bonds, receiving $97,000. What is the balance sheet presentation immediately after the sale?

a) Bonds Payable: $100,000; Discount on Bonds Payable: $3,000
b) Bonds Payable: $97,000; Premium on Bonds Payable: $3,000
c) Bonds Payable: $100,000; Premium on Bonds Payable: $3,000
d) Bonds Payable: $97,000; Discount on Bonds Payable: $3,000

Answer 1

The balance sheet presentation immediately after the sale of the bonds would be Bonds Payable: $100,000; Discount on Bonds Payable: $3,000.

Step-by-step explanation:

The balance sheet presentation immediately after the sale of the $100,000, 5-year bonds for $97,000 would be option a) Bonds Payable: $100,000; Discount on Bonds Payable: $3,000.

1. The Bonds Payable account shows the face value of the bonds, which is $100,000.
2. The Discount on Bonds Payable account shows the difference between the face value of the bonds and the amount received, which is $3,000.

These accounts reflect the initial recording of the bond issuance and any discount or premium associated with it.