Final answer:
The correct accounting entry for the issuance of a bond sold at a discount is 'Debit Cash' and 'Debit Bond Discount', while 'Credit Bonds Payable' is for the face value of the bond.
Step-by-step explanation:
When a company issues a bond at a time when the market interest rate is greater than the bond's coupon rate, the bond is sold at a discount because its stated interest payments are less attractive to investors compared to the market rate.
Because the bond is sold at a discount, the investor is essentially paying less than the face value of the bond, and this difference is known as the bond discount.
The correct entry to record the issuance of the bond in this scenario is Debit Cash for the amount received, Debit Bond Discount for the difference between the face value and the cash received, and Credit Bonds Payable for the face value of the bond.