a b c or d please Review] In March 1, 2018, Dolby Inc. sold 10-year bonds with a

Question

a b c or d please

Review] In March 1, 2018, Dolby Inc. sold 10-year bonds with a face (par) value of $1,000,000. The bonds pay 5% interest semi-annually. The amount Dolby received for the bonds was $925,638, what is the correct journal entry Dolby should record on March 12018, the date of sale? [Read carefully. Some selections are blatantly false and misleading and would never be correct accounting.J CREDIT Bonds payable Premium on bonds DEBIT 925,638 74,362 Cash 1,000,000 DEBIT 925,638 CREDIT Cash Premium on bonds74,362 Bonds payable 1,000,000 CREDIT DEBIT 925,638 74,362 Cash Discount on bonds Bonds payable 1,000,000

Explanation / Answer

1)

Option C

Par value should be paid for the bond holder,

hence bond payable = 1000000 (Credit)

Received less than par , hence discount bond

hence both discount , cash are debit

2)

Option A

Interest is paid on par = 5%*1000000 * 6/12 = 25000

Cash credit

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