Archer Inc. issued $4,000,000 par value, 7% convertible bonds at 99 for cash. If the bonds had not included the conversation fea

Question

3 years ago

5

ture, they would have sold for 95. Prepare the journal entry to record the issuance of the bonds.

1 answer:

Oksana_A [137] · Answer 1 · 2022-04-12T17:05:06+03:00

Answer: Dr Cash $3,960,000

Dr Discount on bonds payable $40,000

Cr Bonds payable $4,000,000

Explanation:

The journal entry to record the issuance of the bonds will be prepared as follows:

Dr Cash = 4,000,000 × 99% = $3,960,000

Dr Discount on bonds payable = $40,000

Cr Bonds payable = $4,000,000

(To record bond issued on discount)