1. Landmark Corp. buys $320,000 of Schroeter Company\'s 9%, 5-year bonds payable
ID: 2334268 • Letter: 1
Question
1. Landmark Corp. buys $320,000 of Schroeter Company's 9%, 5-year bonds payable at par value on September 1. Interest payments are made semiannually. Landmark plans to hold the bonds for the 5-year life. The journal entry to record the purchase should include:
2. A company paid $31,800 plus a broker's fee of $375 to acquire 7% bonds with a $34,000 maturity value. The company intends to hold the bonds to maturity. The cash proceeds the company will receive when the bonds mature equal:
Landmark Corp. buys $320,000 o Schroeter Company's 9%, 5-year bonds payable at par value on September·n e est pay ments are made sem annually, a hold the bonds for the 5-year life. The journal entry to record the purchase should include: mark ians Multiple Choice A debit to Short-Term Investments-Trading $320,000. A debit to Cash $320,000. A debit to Long-Term Investments-HTM $320,000. A debit to Long-Term Investments-AFS $320,000. A debit to Short-Term Investments-AFS $320,000.Explanation / Answer
1.
Held for trading - Debt and equity securities bought and held principally for the purpose of selling them in the near future.
Available for sale(AFS) - Debt and equity securities not classified as trading or held to maturity.
Held to maturity(HTM) - Debt securities that the entity has the positive intent and ability to hold until maturity date.
As Landmark plans to hold the bonds for the entire 5 year life they are the securities held to maturity.
The answer is - A debit to long term investments - HTM $320,000
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2.
The cash proceeds the company will receive when the bonds mature = Maturity value of the bond.
The answer is $34,000
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