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nataly862011 [7]
3 years ago
8

On January 1, Year 1 Residence Company issued bonds with a $50,000 face value. The bonds were issued at face value. They had a 2

0 year term and a stated rate of interest of 7% payable in cash on December 31 of each year. Which of the following shows the journal entry required to recognize the bond issue on January 1, Year 1?
Business
1 answer:
DENIUS [597]3 years ago
7 0

Answer:

Dr Cash account 50,000

Cr Bonds Payable account 50,000

Explanation:

The company received $50,000  in cash. Since cash is an asset and it increased when the bonds were issued, it should be debited.

The company has to pay bonds worth $50,000. Since bonds payable is a liability and it increased when the bonds were issued, it should be credited.

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