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30 July, 10:44

Bridle Inc. issues $300,000, 10-year, 8% bonds at 98. Prepare the journal entry to record the sale of these bonds on March 1, 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

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  1. 30 July, 14:30
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    Cash 294,000 debit

    discount on BP 6,000 debit

    Bonds payable 300,000 credit

    --to record issuance of bonds--

    Explanation:

    We multiply the face value by the issuance quote over 100

    300,000 x 98/100 = 294,000

    Then, the difference will be considered discount as the bond were issued below their face value

    300,000 - 294,000 = 6,000

    We are going to debit cash for the amount collected and then, debit the discount to adjust the bonds payable to the carrying value of 294,000
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