On January 1, 2017, Carmody Corporation purchased 5% bonds with a face value of $60,000 for $62,000. Carmody Corporation intends to hold the bonds until the maturity date. Interest is paid semiannually on January 1 and July 1
The company uses the straight-line amortization method for discounts and premiums. The journal entry on January 1, 2017 is:
A) debit Held-to-Maturity Investment in Bonds for $60,000, debit Premium on Bonds for $2000 and credit Cash for $62,000.
B) debit Held-to-Maturity Investment in Bonds for $62,000 and credit Cash for $62,000.
C) debit Investment in Bonds for $62,000 and credit Interest Revenue for $62,000.
D) debit Investment in Bonds for $60,000, debit Premium on Bonds for $2000 and credit Interest Revenue $62,000.
B
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