Question

On december 31, 2015, wintergreen, inc., issued $150,000 of 7 percent, 10-year bonds at a price of 93.25. complete the necessary journal entry by selecting the account names and dollar amounts from the drop-down menus

Answer 1

Journal entry for the issuance of Bonds:

It is given that on December 31, 2015, wintergreen, inc., issued $150,000 of 7 percent, 10-year bonds at a price of 93.25. That means the proceeds from issue of these bonds are 150,000*93.25/100 = $139,875 and the discount on issue of bonds shall be = 150,000-139875 = $10,125.

The Journal entry for the issuance of Bonds shall be as follows:

December 31, 2015

Account Titles    Debit   Credit

Cash             $139,875

Discount on Bonds Payable  $10,125

Bonds Payable              $150,000

(Being bonds issued on discount)