Amortizing the Discount on Bonds Payable, INCREASES the Bond Interest Expense. If bonds sell at a discount it DECRESES the amount of cash received at issuance. If bonds sell at a premium it INCREASES the amount of cash received at issuance. If bonds sold at a premium, the amount of cash paid back upon redemption REMAINS THE SAME If bonds sold at a discount, the amount of cash paid back upon redemption REMAINS THE SAME. A debit to BIE that account. A credit to BIE that account. If market interest rates rise, bond prices If market interest rates decline; bond prices Fill in the blanks If bonds specify who owns them, it is known as In the amortization journal entry the premium account will be (Dr or Cr) In the amortization journal entry the discount account will be (Dr. or Cr.) Bonds that are not backed by a company's securities are known as bonds may be exchanges for another security of the bonds may be redeemed prior to maturity at the election of the company. bonds means that anyone who holds the bonds can cash the bonds