Question

On December 31, 2015, Wintergreen, Inc., issued $150,000 of 7 percent, 10-year bonds at a price of 93.25. Write down the necessary journal entries.

Answer 1

Answer:

December 31

DR Cash $139,875

DR Discount on Bonds Payable $10,125

CR Bonds Payable $ 150,000

Explanation:

Cash

Because Wintergreen is selling at $93.25 when Par Value is usually at $100, they are selling at a discount.

Cash Received = 150,000 * 93.25/100

= $139,875

Discount on Bonds

= 150,000 - 139,875

= $10,125