On August 1, 2020, Peppa Inc. acquired $120,000 (face value) 10% bonds of George Corporation at 102 plus accrued interest. The bonds were dated May 1, 2020, and mature on April 30, 2023, with interest payable each October 31 and April 30. The bonds will be held to maturity. Assuming the amortized cost model is used, the entry to record the purchase of the bonds on August 1, 2020 is Select one: a.Bond Investment at Amortized Cost 125,400 Cash 125,400 b.Bond Investment at Amortized Cost 122,400Interest Income 3,000 Cash 125,400 c.Bond Investment at Amortized Cost 125,400Interest Income 3,000 Cash 122,400 d.Bond Investment at Amortized Cost 120,000Premium on Bonds 5,400 Cash 125,400
On August 1, 2020, Peppa Inc. acquired $120,000 (face value) 10% bonds of George Corporation at 102 plus accrued interest. The bonds were dated May 1, 2020, and mature on April 30, 2023, with interest payable each October 31 and April 30. The bonds will be held to maturity. Assuming the amortized cost model is used, the entry to record the purchase of the bonds on August 1, 2020 is Select one: a.Bond Investment at Amortized Cost 125,400 Cash 125,400 b.Bond Investment at Amortized Cost 122,400Interest Income 3,000 Cash 125,400 c.Bond Investment at Amortized Cost 125,400Interest Income 3,000 Cash 122,400 d.Bond Investment at Amortized Cost 120,000Premium on Bonds 5,400 Cash 125,400
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 1MC
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Question
On August 1, 2020, Peppa Inc. acquired $120,000 (face value) 10% bonds of George Corporation at 102 plus accrued interest. The bonds were dated May 1, 2020, and mature on April 30, 2023, with interest payable each October 31 and April 30. The bonds will be held to maturity. Assuming the amortized cost model is used, the entry to record the purchase of the bonds on August 1, 2020 is
Select one:
a.
Bond Investment at Amortized Cost 125,400
Cash 125,400
Bond Investment at Amortized Cost 125,400
Cash 125,400
b.
Bond Investment at Amortized Cost 122,400
Interest Income 3,000
Cash 125,400
Bond Investment at Amortized Cost 122,400
Interest Income 3,000
Cash 125,400
c.
Bond Investment at Amortized Cost 125,400
Interest Income 3,000
Cash 122,400
Bond Investment at Amortized Cost 125,400
Interest Income 3,000
Cash 122,400
d.
Bond Investment at Amortized Cost 120,000
Premium on Bonds 5,400
Cash 125,400
Bond Investment at Amortized Cost 120,000
Premium on Bonds 5,400
Cash 125,400
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