Bonds Payable
What are Bonds Payable?
The bonds payable account is a liability account that shows the face value of any bonds issued by the company.
![bp 1](https://seeaccountingnow.online/wp-content/uploads/2021/08/bp-1.jpg)
How it Works
A corporation may need money to fund a project.
![bp 2](https://seeaccountingnow.online/wp-content/uploads/2021/08/bp-2.jpg)
One way for the corporation to raise money is by selling bonds to investors.
![bp 3](https://seeaccountingnow.online/wp-content/uploads/2021/08/bp-3.jpg)
These bonds will have a face value.
![bp 4](https://seeaccountingnow.online/wp-content/uploads/2021/08/bp-4.jpg)
This is how much investors will pay for the bond.
![bp 5](https://seeaccountingnow.online/wp-content/uploads/2021/08/bp-5.jpg)
When investors pay for their bonds, the corporation deposits the money in the bank.
![bp 6](https://seeaccountingnow.online/wp-content/uploads/2021/08/bp-6.jpg)
To record the transaction, you credit the bonds payable account.
![bp 7](https://seeaccountingnow.online/wp-content/uploads/2021/08/bp-7.jpg)
This shows the money came from bonds payable.
![bp 8](https://seeaccountingnow.online/wp-content/uploads/2021/08/bp-8.jpg)
After this, you debit the checking account.
![bp 9](https://seeaccountingnow.online/wp-content/uploads/2021/08/bp-9.jpg)
This shows the money was deposited in the bank.
![bp 10](https://seeaccountingnow.online/wp-content/uploads/2021/08/bp-10.jpg)
When complete, the transaction will show that money came from bonds payable and went to the bank.
![bp 11](https://seeaccountingnow.online/wp-content/uploads/2021/08/bp-11.jpg)
© R.J. Hickman 2020