Journal entry required to record issuance of bonds

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Reference no: EM131908185

On January 1, 2016, Sanchez Corporation issued 5-year $200,000 bonds with a 4% stated rate of interest at 97. Sanchez Corporation pays the interest annually on December 31 and uses the straight-line amortization method. Which of the following choices represents the general journal entry required to record the issuance of the bonds?

Debit Credit

A. Cash 200,000 Premium on Bonds Payable 6,000 Bonds Payable 194,000 Debit Credit

B. Cash 200,000 Bonds Payable 200,000 Debit Credit

C. Cash 194,000 Discount on Bonds Payable 6,000 Bonds Payable 200,000 Debit Credit

D. Cash 194,000 Premium on Bonds Payable 6,000 Bonds Payable 200,000

Reference no: EM131908185

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