A short-term investment in a U.S.Treasury bill costs $24,200 and will mature in six months at $25,000.Management intends to hold the investment until it matures.The entry to record receipt of cash at maturity is: (No prior entries were made to recognize revenue.)
A)Cash 25,000 Short-Term Investments 24,200
Interest Income 800
B)Cash 25,000 Short-Term Investments 25,000
C)Cash 24,200 Short-Term Investments 24,200
D)Cash 25,000 Short-Term Investments 24,200
Gain on Sale of Investments 800

Question

Quizplus · Accepted Answer

The cash received at maturity is $25,000. The initial investment was $24,200, so the difference of $800 is recognized as interest income.

A Short-Term Investment in a U