Kendall Corp.purchased at par value $75,000 of Shrem Company's 8% bonds that mature in three-years.The bonds pay interest semiannually on June 1 and December 1.Kendall plans to hold the bonds until they mature.When the bonds mature,Kendall should prepare the following journal entry:
A)debit Long-Term Investments-HTM,$75,000;credit Cash,$75,000.
B)debit Cash,$6,000;credit,Unrealized Gain-Equity,$6,000.
C)debit Cash,$75,000;credit Long-Term Investments-HTM,$75,000.
D)debit Unrealized Gain-Equity,$6,000;credit Cash,$6,000.
E)debit Cash,$75,000;credit Long-Term Investments-Trading,$75,000.

Question

Quizplus · Accepted Answer

When the bonds mature, Kendall will receive the face value of the bonds ($75,000) and should record it as a debit to Cash and a credit to Long-Term Investments-HTM. The other choices do not accurately reflect the transaction.