On November 1, 20A, Katz Company purchased twenty $1,000, 9% bonds (interest is payable each April 30, and October 31) at 97. What is the amount that should be recorded in the long-term investment account on November 1, 20A?
A) $20,000
B) $18,800
C) $20,600
D) $19,400

Question

Quizplus · Accepted Answer

The bonds were purchased at 97, which means 97% of the face value. The face value of the bonds is $20,000 (20 bonds x $1,000 each). Therefore, the recorded amount is 97% of $20,000, which is $19,400.

On November 1, 20A, Katz Company Purchased Twenty $1,000, 9