JournaldrillBonds issued at a discount
A journal entry exercise from Journaldrill. Solve it with an account picker and debit and credit fields in your browser, and it is checked the moment you submit.
The task
On July 1, an interest payment date, Ashford Rail Services issues $400,000 of 10-year, 7% bonds at 97.
What this exercise teaches
Cash is $400,000 x 97% = $388,000. The $400,000 - $388,000 = $12,000 difference is the discount.
A hint if you get stuck
Bonds Payable is always recorded at face value; the shortfall in cash goes to a contra-liability.
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