Question

Landmark Corp. buys $300,000 of Schroeter Company's 8% five-year bonds payable at par value on September 1. Interest payments are made semiannually.
Landmark plans to hold the bonds for the five year life.
The journal entry to record the purchase should include:__________.
A) A debit to Long-Term Investments-AFS $300,000.
B) A debit to Short-Term Investments-Trading $300,000.
C) A debit to Long-Term Investments-HTM $300,000.
D) A debit to Short-Term Investments-AFS $300,000.
E) A debit to Cash $300,000.

Answer 1

Answer: A debit to Long-Term Investments-HTM $300,000

Explanation:

A journal entry is the act of making records of the transactions that takes place and such transactions typically shows the debit and credit balance of the company.

From the question, we are informed that Landmark Corp. buys $300,000 of Schroeter Company's 8% five-year bonds payable at par value on September 1. Interest payments are made semiannually and that Landmark plans to hold the bonds for the five year life.

The journal entry to record the purchase should include a debit to Long-Term Investments-HTM $300,000.