Chapter 16: Q1BE. (page 874)
Archer Inc. issued $4,000,000 par value, 7% convertible bonds at 99 for cash. If the bonds had not included the conversion feature, they would have sold for 95. Prepare the journal entry to record the issuance of the bonds.
Short Answer
Cash account will be debited with $3,960,000; Discount on Bond Payable will be debited with $40,000, and Bonds Payable will be credited with $4,000,000.