Landmark Corp. buys $300,000 of Schroeter Company's 8%, 5-year bonds payable at par value on September 1. Interest payments are made semiannually. Landmark plans to hold the bonds for the 5-year life. The journal entry to record the purchase should include:

Question

Quizplus · Accepted Answer

Since Landmark plans to hold the bonds until they mature, they should be classified as a long-term investment. Therefore, the journal entry should include a debit to Long-Term Investments-HTM for the purchase price of $300,000 and a credit to Cash for the same amount. The other account options are not appropriate for this transaction.