Asked by Abbas Ghaderi on May 01, 2024
Verified
An investor purchased $50,000 of 10-year bonds it intends to hold to maturity.The investor's journal entry to record the purchase is a debit to Debt Investments-HTM for $50,000 and a credit to Cash for $50,000.
Debt Investments-HTM
Investments in debt securities intended to be held to maturity, reflecting a long-term investment strategy for earning interest income.
Maturity
The due date on which a financial obligation must be repaid in full.
- Learn the procedures for recording transactions related to the purchase and the collection of interest revenue on debt instruments.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
True
Explanation :
This is the correct journal entry for purchasing bonds intended to be held to maturity. The debit is to the Debt Investments Held-to-Maturity (HTM) account and the credit is to the Cash account for the same amount of $50,000.
Learning Objectives
- Learn the procedures for recording transactions related to the purchase and the collection of interest revenue on debt instruments.
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