On January 1, Parson Freight Company issues 8.5%, 10-year bonds with a par value of $3,800,000. The bonds pay interest semiannually. The market rate of interest is 9.5% and the bond selling price was $3,541,787. The bond issuance should be recorded as: Multiple Choice Debit Cash $3,541,787; credit Bonds Payable $3,541,787. Debit Cash $3,541,787; debit Interest Expense $258,213; credit Bonds Payable $3,800,000. Debit Cash $3,541,787; debit Discount on Bonds Payable $258,213; credit Bonds Payable $3,800,000.

On January 1, Parson Freight Company issues 8.5%, 10-year bonds with a par value of $3,800,000. The bonds pay interest semiannually. The market rate of interest is 9.5% and the bond selling price was $3,541,787. The bond issuance should be recorded as: Multiple Choice Debit Cash $3,541,787; credit Bonds Payable $3,541,787. Debit Cash $3,541,787; debit Interest Expense $258,213; credit Bonds Payable $3,800,000. Debit Cash $3,541,787; debit Discount on Bonds Payable $258,213; credit Bonds Payable $3,800,000.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 7MCQ

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