Mercy Hospital Issued $1,000,000 of 5% 20-Year Bonds on January

Multiple Choice

Mercy Hospital issued $1,000,000 of 5% 20-year bonds on January 1 that pay interest semiannually each June 30 and December 31. The market interest rate at the time of issue was 5%. The journal entry Mercy Hospital records for the issuance of the bonds is:

A) Debit Bonds Payable $1,000,000; credit Cash $1,000,000.
B) Debit Cash $1,050,000; credit Bond Interest Payable $50,000; credit Bonds Payable $1,000,000.
C) Debit Cash $1,000,000; credit Bonds Payable $1,000,000.
D) Debit Bond Interest Expense $50,000; credit Cash $50,000.
E) Debit Bond Investment $1,000,000; credit Cash $1,000,000.