An investor purchased at par value $75,000 of Cort's 8% bonds,that mature in three-years.The bonds pay interest semiannually on June 1 and December 1.The investor plans to hold the bonds until they mature.When the bonds mature,the investor should prepare the following journal entry:

Question

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When the bonds mature, the investor will receive the par value of $75,000, which is the amount they initially invested. Thus, the journal entry should be a debit to Cash for $75,000 and a credit to Long-Term Investments-HTM (held-to-maturity) for $75,000, since the investor plans to hold the bonds until they mature. There is no unrealized gain or loss involved in this situation, so options B and D are not correct. Option E is not correct because the bonds were classified as held-to-maturity, not trading.

An Investor Purchased at Par Value $75,000 of Cort's 8