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Falcon Company purchased 10% bonds with a face value of $200,000 at par plus accrued interest on April 1, Year 1. Interest on these bonds

Falcon Company purchased 10% bonds with a face value of $200,000 at par plus accrued interest on April 1, Year 1. Interest on these bonds is payable June 30 and December 31. Falcon intends to hold the bonds until maturity in Year 3. The entry to record the acquisition of the bonds includes a

  1. debit to Investment in Trading Securities for $205,000.
  2. debit to Investment in Held-to-Maturity Debt Securities for $205,000.
  3. debit to Interest Income for $5,000.
  4. debit to Interest Receivable for $5,000.

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