Describe the accounts in the JE$,$ under Scenario A

SOCIAL IMPACT LEARNING wants to issue $$100,000$ of $12\%$ bonds payable that matures in five years, semi$-$annual interest on July $1$ and Jan $1$ of each year. The company issues these bonds on January $1,2016.$

The market rate for similar investments is

Scenario A: $12\%$ under this scenario $($issue at Face$)$; CR $=$ MR

Scenario A $($Face$)$

Dr$.$ Cash $100,000<<$ Proceeds $=$ Face Amount

Cr$.$ Bonds Payable $($B$/$P$)100,000<<$ Face Amount

at Face Value or Par: Contract Rate $($CR$),$ the rate on the Face of the bonds $=$ Market Rate $($MR$).$

Both the CR and the MR are the same, which means that investor will receive a return on the bonds equal to the CR$.$ No need to change the issue price to effectively reduce or increase the CR to match the MR$,$ since they are both equal. The JE will be as follows:

Pricing Bonds

Scenario A $($Face$)$

Dr$.$ Cash $100,000<<$ Proceeds $=$ Face Amount

Cr$.$ Bonds Payable $($B$/$P$)100,000<$