Amex Corporation invests excess cash to purchase $25,000 in corporate bonds on March 30,2018.In addition to the $25,000,Amex also paid a brokerage fee of $1,000.Amex intends to hold the bonds until maturity and has the ability to do so.When the bonds mature on March 30,2020,Amex plans to use the cash for its business expansion.Which of the following is included in the journal entry on March 30,2018?

Question

Quizplus · Accepted Answer

Amex Corporation's intention to hold the bonds until maturity and its ability to do so means the bonds should be classified as held-to-maturity. The total cost of the investment includes both the purchase price of the bonds ($25,000) and the brokerage fee ($1,000), totaling $26,000. Therefore, the correct journal entry includes a debit to Held-to-Maturity Debt Investments for $26,000.

Amex Corporation Invests Excess Cash to Purchase $25,000 in Corporate