Horngren's Accounting, Student Value Edition Plus MyAccountingLab with Pearson eText, Access Card Package
Horngren's Accounting, Student Value Edition Plus MyAccountingLab with Pearson eText, Access Card Package
11th Edition
ISBN: 9780134078946
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
Question
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Chapter 15, Problem 3QC
To determine

Concept introduction:

Held-to-Maturity Investments:

The investments when purchased are required to be classified on the basis of factors include –

a. Intent to hold investment

b. Length of time i.e. till maturity.

When it is given that the investment has been purchased with the intent to hold till maturity it is considered as Held-to-maturity investment.

The journal entries on the purchase of Held-tomaturity investment and on the receipt of interest revenue on the Held-tomaturity investments are as follows –

Date Accounts Titles and Descriptions Debit (Amount in $) Credit (Amount in $)
  Long term investment - Held-tomaturity    
  Cash    
  (To record purchase of held-to-maturity investment)    
       
  Cash    
  Interest Revenue    
  (To record interest received on held-to-maturity investment)    

Correct option for recording the interest revenue received on bond investment.

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