Mazzeo Company acquires 80 Dodd's 10%, 5 year, $1,000 bonds on January 1, 2017 for $80,000. The journal entry to record this investment includes a debit to

Question

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The journal entry to record the acquisition of the bonds would be a debit to Debt Investments for the cost of the investment, which is $80,000. Cash would be credited for the same amount. The bond interest income would be recognized over the life of the bonds. Stock Investments and Debt Investments are two separate categories of investments, and the acquisition of bonds would fall under Debt Investments. A debit of $88,000 would be incorrect as it overstates the actual cost of the investment.

Mazzeo Company Acquires 80 Dodd's 10%, 5 Year, $1,000 Bonds