Question

The adjusting entry to record the amortization of a discount on bonds payable is Group of answer choices debit Discount on Bonds Payable, credit Interest Expense debit Interest Expense, credit Discount on Bonds Payable debit Interest Expense, credit Cash debit Bonds Payable, credit Interest Expense

Answer 1

Answer:

The adjusting entry to record the amortization of a discount on bonds payable is:

debit Interest Expense, credit Discount on Bonds

Explanation:

The debit to the Interest Expense increases the Interest Expense (coupon interest) by the amortized discount for the period while the credit to the Discount on Bonds reduces the balance of the Discount on Bonds, which is originally a debit entry.  Note that the amortized discount is calculated as the difference between the coupon interest and the interest on the Bonds Payable balance based on the effective interest method.