Define journal entry to record the issuance of bonds

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Reference no: EM131880770

Question: 1. On 1/1/20X1, PDQ Corp issues $2.5 million of 15-year bonds at par value. The journal entry to record the issuance of bonds on 1/1/20X1 would include which of the following:

- Debit Interest Expense $2.5 million

- Credit Cash $2.5 million

- Credit Bonds Payable $2.5 million

- Debit Bonds Payable $2.5 million

- Credit Interest Expense $2.5 million

2. Alliance Products purchased equipment that cost $120,000. It had an estimated useful life of four years and no residual value. The equipment was depreciated by the straight-line method and was sold at the end of the third year of use for $25,000 cash. Alliance should record:

- A gain of $5,000.

- A loss of $5,000.

- Neither a gain nor a loss since the computer was sold at its book value.

- Neither a gain nor a loss since the gain would not be recognized.

Reference no: EM131880770

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