Accruex Corporation invests excess cash of $25,000 in corporate bonds on March 3

Question

Accruex Corporation invests excess cash of $25,000 in corporate bonds on March 30, 2017. The bonds will mature in two years from the date of purchase. When the bonds mature in 2019, Accruex plans to use the cash for its business expansion. Which of the following is included in the journal entry on March 30, 2017?

A. a debit to Short-term Investmentslong dash U.S. Treasury Notes for $25,000

B. a debit to Long-term Investmentslong dash Available-for-Sale for $25,000

C. a credit to Long-term Investmentslong dash Available-for-Sale for $25,000

D. a debit to Long-term Investmentslong dash Held-to-Maturity for $25,000

Explanation / Answer

Answer : A

The Accruex corporate invested excess cash of $25,000

When the maturity period is only two years and is not for sale or availability for sale

so entry will be

a debt to  Short-term Investmentslong dash U.S. Treasury Notes for $25,000

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