Matthew Company purchases held-to-maturity bonds for $12,000 cash.The journal entry to record this transaction will include a:
A)debit to the Held-to Maturity Investment in Bonds account and a credit to Cash.
B)debit to Cash and a credit to the Held-to Maturity Investment in Bonds account.
C)debit to the Long-term Investment account and a credit to Cash.
D)debit to the Unrealized Loss on Held-to Maturity Investment in Bonds account and a credit to Cash.

Question

Quizplus · Accepted Answer

The correct journal entry for purchasing held-to-maturity bonds involves debiting the Held-to Maturity Investment in Bonds account to record the investment, and crediting Cash to reflect the outflow of cash. This accurately reflects the acquisition of the bonds as an asset and the corresponding decrease in cash.

Matthew Company Purchases Held-To-Maturity Bonds for $12,000 Cash