Reference no: EM132873319

During the current year, an entity issued 5,000,000 9% face value bonds at 110 at interest date. In connection with the issue of the bonds, the entity paid the following costs:

Promotion cost 100,000

Engraving and printing cost 200,000

Underwriter commission 400,000

Legal fees 350,000

Fees paid to accountants for registration 50,000

Problem 1: What amount should be recorded initially as discount or premium on bonds payable?

a. 500,000 premium
b. 500,000 discount
c. 600,000 premium
d. 600,000 discount