Respuesta :
The journal entry to record the issuing of 100 bonds at their $1,000 face value will include a debit to cash and a credit to bonds payable.
What is bonds payable? Give examples.
Bonds due are a type of long-term debt typically issued by businesses, institutions of higher learning, and governments. It is a formal promise/agreement made by the bond issuer to pay interest, typically every six months (semiannually), and to pay the principal or maturity amount at a future date. The bond indenture is the legal document that specifies the terms of the bonds that are due.
Example of Bonds Payable
Usually public utilities issue bonds to help finance a new electric power plant, hospitals issue bonds for new buildings, and governments issue bonds to finance projects, operating deficits, or to redeem older bonds that are maturing.
For example, a profitable public utility might finance half of the cost of a new electricity generating power plant by issuing 30-year bonds. If the current market interest rate for the bonds is 4%, the cost after the income tax savings may be only 3%.
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