On September 30, 2019, Angel Outfitters invested in 10-year, $900,000, 7% bonds of ABC Co. These bonds were dated January 1, 2019, and pay interest annually on December 31. Angel paid face value plus accrued interest for these bonds, and intends to hold these bonds until maturity. Which of the following is the correct journal entry to record this investment? A) Held-to-Maturity Debt Investment - Cost Interest Receivable Cash 900,000 47,250 947,250 B) Held-to-Maturity Debt Investment - Cost 900,000 Discount on Held-to-Maturity Investment Cash 47,250 947,250 C) Available-for-Sale Debt Investment - Cost Discount on Held-to-Maturity Investment Cash D) Available-for-Sale Debt Investment - Cost Discount on Available-for-Sale Investment Cash 900,000 47,250 947,250 900,000 47,250 947,250
On September 30, 2019, Angel Outfitters invested in 10-year, $900,000, 7% bonds of ABC Co. These bonds were dated January 1, 2019, and pay interest annually on December 31. Angel paid face value plus accrued interest for these bonds, and intends to hold these bonds until maturity. Which of the following is the correct journal entry to record this investment? A) Held-to-Maturity Debt Investment - Cost Interest Receivable Cash 900,000 47,250 947,250 B) Held-to-Maturity Debt Investment - Cost 900,000 Discount on Held-to-Maturity Investment Cash 47,250 947,250 C) Available-for-Sale Debt Investment - Cost Discount on Held-to-Maturity Investment Cash D) Available-for-Sale Debt Investment - Cost Discount on Available-for-Sale Investment Cash 900,000 47,250 947,250 900,000 47,250 947,250
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:On September 30, 2019, Angel Outfitters invested in 10-year, $900,000, 7% bonds of ABC Co. These bonds were dated January 1, 2019, and pay interest annually on December 31. Angel paid face value plus
accrued interest for these bonds, and intends to hold these bonds until maturity. Which of the following is the correct journal entry to record this investment?
A)
Held-to-Maturity Debt Investment - Cost
Interest Receivable
Cash
900,000
47,250
947,250
B)
Held-to-Maturity Debt Investment - Cost
900,000
Discount on Held-to-Maturity Investment
Cash
47,250.
947,250
C)
Available-for-Sale Debt Investment - Cost
900,000
Discount on Held-to-Maturity Investment
Cash
47,250
947,250
D)
Available-for-Sale Debt Investment - Cost
Discount on Available-for-Sale Investment
Cash
900,000
47,250
947,250
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