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Pharoah Company issued $530,000 of 5-year, 5% bonds at 97 on January 1, 2020. The bonds pay interest annually. Your answer is partially correct. Try again. Prepare the journal entry to record the issuance of the bonds

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Answer:

                                                Dr.             Cr.

Cash                                      $514,100

Discount on bond payable  $15,900

Bond Payable                                       $530,000

Explanation:

Cash is received against the Bond issued is debited due to its debit nature and the bond payable account is credited because it is a liability and its nature is credit.

Cash Received = ( 530,000 / 100 ) x 97 = $514,100

Discount  = (530,000/100) x (100 - 97) = $15,900

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