Vangaurd Co. purchased 80, 5% McLaughlin Company bonds for $80,000 cash. Interest is payable annually on January 1. The entry to record the purchase would include debit to

Question

Quizplus · Accepted Answer

The purchase price of the bonds is $80,000, so a debit of $80,000 would be made to Debt Investments. There is no indication that Vanguard paid more than the face value of the bonds, so option A is incorrect. Cash paid was $80,000, not $84,000, so option B is incorrect. Option D is incorrect because the investment was in bonds, not stock.