What are Bonds Payable?
The bonds payable account is a liability account that shows the face value of any bonds issued by the company.
How it Works
A corporation may need money to fund a project.
One way for the corporation to raise money is by selling bonds to investors.
These bonds will have a face value.
This is how much investors will pay for the bond.
When investors pay for their bonds, the corporation deposits the money in the bank.
To record the transaction, you credit the bonds payable account.
This shows the money came from bonds payable.
After this, you debit the checking account.
This shows the money was deposited in the bank.
When complete, the transaction will show that money came from bonds payable and went to the bank.