Question
On January 1, 2017, Brooklyn Company purchases $80,000, 7% bonds at a price of 94 and a maturity date of January 1, 2027. Brooklyn Company
On January 1, 2017, Brooklyn Company purchases $80,000, 7% bonds at a price of 94 and a maturity date of January 1, 2027. Brooklyn Company intends to hold the bonds until maturity. Interest is paid semiannually, on January 1 and July 1. Brooklyn Company has a calendar year and uses the
straightminusline
amortization method for discounts and premiums. The adjusting entry to amortize the bond investment on December 31, 2017 is:
A.
debit Interest Receivable $2,800 and credit Interest Revenue $2,800.
B.
debit
HeldminustominusMaturity
Investment in Bonds $480 and credit Interest Revenue $480.
C.
debit Interest Receivable $5,600 and credit Interest Revenue $5,600.
D.
debit
HeldminustominusMaturity
Investment in Bonds $240 and credit Interest Revenue $240.
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