Landmark buys $300,000 of Schroeter Company's 8% five-year bonds payable at par value on September 1.Interest payments are made semiannually on March 1 and September 1.The journal entry Landmark should record to accrue interest earned at year-end December 31 is:

Question

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Landmark buys $300,000 of Schroeter Company's 8% five-year bonds payable at par value on September 1. Interest payments are made semiannually on March 1 and September 1.
For the year-end on December 31, only one interest payment has been made on September 1. Therefore, Landmark needs to accrue interest revenue for the three months of interest earned from September 1 to December 31.
The calculation of interest revenue for three months is:
$300,000 × 8% × 3/12 = $6,000
The journal entry to record the accrual of interest revenue is:
Debit Interest Receivable $6,000
Credit Interest Revenue $6,000
Therefore, the best choice is A, which correctly records the accrual of $6,000 interest revenue for the three months ending on December 31.

Landmark Buys $300,000 of Schroeter Company's 8% Five-Year Bonds Payable