Question
On January 1, Parson Freight Company issues 7.0%, 10-year bonds with a par value of $3,000,000. The bonds pay interest semiannually. The market rate of
On January 1, Parson Freight Company issues 7.0%, 10-year bonds with a par value of $3,000,000. The bonds pay interest semiannually. The market rate of interest is 8.0% and the bond selling price was $2,796,145. The bond issuance should be recorded as:
Multiple Choice
-
Debit Cash $2,796,145; debit Discount on Bonds Payable $203,855; credit Bonds Payable $3,000,000.
-
Debit Cash $3,000,000; credit Bonds Payable $2,796,145; credit Discount on Bonds Payable $203,855.
-
Debit Cash $2,796,145; debit Interest Expense $203,855; credit Bonds Payable $3,000,000.
-
Debit Cash $3,000,000; credit Bonds Payable $3,000,000.
-
Debit Cash $2,796,145; credit Bonds Payable $2,796,145.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started