On April 1, Alliance Company purchased $50,000 of Tetter Company's 12% bonds at 100 plus accrued interest of $2,000. On June 30, Alliance received its first semiannual interest. On February 1, Alliance sold $40,000 of the bonds at 103 plus accrued interest. The journal entry Alliance will record on April 1 for the purchase of the bonds will include a
A) credit to Interest Payable for $2,000
B) debit to Investments-Tetter Company Bonds for $52,000
C) debit for Cash of $50,000
D) debit to Investments-Tetter Company Bonds for $50,000

Question

Quizplus · Accepted Answer

The purchase of bonds is recorded at the purchase price, excluding accrued interest. The accrued interest is recorded separately.

On April 1, Alliance Company Purchased $50,000 of Tetter Company's