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

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Landmark Corp. plans to hold Schroeter Company's bonds for the full 5-year life, indicating an intention to hold the bonds until maturity. Therefore, the investment should be classified as held-to-maturity (HTM) and a debit should be made to Debt Investments-HTM for the full amount of $300,000. The other investment classifications (available-for-sale and trading) are inappropriate because they are used for investments that are intended to be sold or traded in the short-term. The cash payment of $300,000 will be credited.