Chapter 10, Problem 3QC

If Intervale Railway invests $100,000 in 5% bonds at face value that the company intends to hold until the bond maturity date, the interest revenue recognized when each semiannual interest payment is received would be recorded as a

a. credit to Cash, $2,500.

b. credit to Interest Revenue, $2,500.

c. debit to Long-term Investments- Held-to-Maturity, $2,500.

d. debit to Dividend Revenue, $2,500.