This Question: 1 pt 7 of 21 (0 complete) This Quiz: 25 pts possible On January 1

Question

This Question: 1 pt 7 of 21 (0 complete) This Quiz: 25 pts possible On January 1, 2017, Bucket Company purchased as an investment a $1,100 4% bond for $1,060 Bucket plans to hold the bond until the maturity date of January 1, 2027 The bond pays interest on January 1 and July 1. The company's fiscal year ends on December 31 and it uses the straight-line amortization method for discounts and premiums. The journal entry on December 31, 2017 is: O A. debit Held-to-Maturity Investment in Bonds for $22 and credit Interest Revenue for $22 OB. debit Interest Receivable for $24, credit Held-to-Maturity Investment in Bonds for $2 and credit Interest Revenue for $22. O C. debit Interest Receivable for $22, debit Held-to-Maturity Investment in Bond for $2 and credit Interest Revenue for $24. D. debit Cash for $22 and credit Interest Revenue for $22

Explanation / Answer

Debit Interest receivable $22, Debt Held to maturity investment in Bond for $2 and credit interest revenue for $24 Option C is correct Interest receivable = 1100*4%/2 = $22 Amortization=(1100-1060)/20 = $2

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