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6 May, 00:58

Totito Inc. issues $100,000 face amount bonds at $98,000. The journal Totito Inc. issues $100,000 face amount bonds at $98,000. The journal entry to record the issuance should include:entry to record the issuance should include:

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  1. 6 May, 01:05
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    Dr. Cash $98,000

    Dr. Discount on Bond $2,000

    Cr. Bond payable $100,000

    Explanation:

    If the bonds are issued at a price below the face value then the bonds are issued on a discounted value. The difference between face value and issuance value is known as discount. This discount is recorded separately and amortized over bond's life.

    As per given data

    Face value = $100,000

    Issuance value = $98,000

    Discount = $100,000 - $98,000 = $2,000
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