An investor purchased $50,000 of 10-year bonds it intends to hold to maturity at par.The investor's journal entry to record the purchase is a debit to Debt Investments for $50,000 and a credit to Cash for $50,000.

Question

Quizplus · Accepted Answer

This is correct as the investor is purchasing debt investments (the bonds) and paying for them with cash. The journal entry correctly reflects this by debiting Debt Investments and crediting Cash for the same amount of $50,000.

An Investor Purchased $50,000 of 10-Year Bonds It Intends to Hold