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.When the bonds mature,the journal entry to record the proceeds will be:

Question

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When the bonds mature, the investor will receive the face value of the bonds, which is equal to the amount paid for the bonds at the time of purchase. Therefore, the journal entry to record the proceeds will be a debit to Cash for $300,000, and a credit to the Debt Investments held to maturity (HTM) account for $300,000. The Interest Revenue account is used to record the periodic interest payments received from the bond issuer, and Interest Receivable is used to record interest that has been earned but not yet received. Bonds Payable is the account used by the bond issuer to record the outstanding balance of their bond debt.