Bonds Issued at Par | Financial Accounting CPA Exam

Bonds issued at par explained for CPA and CMA exam candidates and financial accounting students. This lecture covers what it means to issue a bond at face value, the journal entries at issuance, for interest payments, and at maturity, and why the carrying value of a par bond stays constant — the simplest bond scenario and the foundation before learning discounts and premiums. Essential for anyone preparing for the CPA exam, CMA exam, or studying long-term debt. Try it free at farhatlectures.com — interactive exercises, lectures, simulations, cases, multiple choice, and AI tools for CPA, CMA, EA and students. Video Timeline & Key Concepts: 0:00 Definition: a bond issued at par when face value equals selling price 1:31 Why par is simplest: no premium or discount to amortize 4:44 Interest payments: semiannual entry debiting Interest Expense and crediting Cash 6:24 Maturity: repaying the principal by debiting Bonds Payable and crediting Cash 7:37 Carrying value stays constant at face value throughout the bond's life 9:06 Preview of bonds issued at a discount or premium Frequently Asked Questions: Q: What does it mean for a bond to be issued at par? A: A bond is issued at par when its selling price equals its face (par) value. This happens when the bond's coupon rate equals the market interest rate, so investors are indifferent between this bond and comparable market alternatives. Q: What is the journal entry when a bond is issued at par? A: At issuance the company debits Cash and credits Bonds Payable for the full face value. There is no premium or discount account because the proceeds equal the par value. Q: How is interest recorded on a par bond? A: Each interest period the company debits Interest Expense and credits Cash for the coupon payment. Because there is no premium or discount, interest expense equals the cash interest paid. Q: Why does the carrying value of a par bond stay the same? A: With no unamortized premium or discount, there is nothing to amortize over the bond's life, so the carrying value remains equal to the face value from issuance through maturity. Hashtags: #bondsissuedatpar #bondspayable #parbonds #financialaccounting #longtermdebt #CPAexam #CMAexam #enrolledagentexam #accountingcourses #collegecourses #courses