The journal entry to record $350,000 of bonds that were issued at 97 would be to:
A) debit Cash, $350,000; credit Bonds payable, $339,500; credit Premium on bonds payable, $10,500.
B) debit Cash, $339,500; credit Bonds payable, $339,500.
C) debit Cash, $350,000; credit Bonds payable, $350,000.
D) debit Cash, $339,500; debit Discount on bonds payable, $10,500; credit Bonds payable, $350,000.
D) debit Cash, $339,500; debit Discount on bonds payable, $10,500; credit Bonds payable, $350,000.
Explanation: debit cash for total amount (bond price × issue rate); debit Discount for difference between bond value and sale price. Ex: $350,000 × (97/100) = $339,500 cash; $350,000 - $339,500 = $10,500 discount.
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