On November 1,20A,Katz Company purchased twenty $1,000,9% bonds (interest is payable each April 30,and October 31)at 97.What is the amount that should be recorded in the long-term investment account on November 1,20A?

Question

Quizplus · Accepted Answer

The amount to be recorded in the long-term investment account on November 1,20A is the purchase price of the bonds, which is calculated as follows:

$1,000 x 9% x 2/12 = $15 (interest accrued from April 30 to November 1)
$1,000 - $15 = $985 (the purchase price per bond)
$985 x 20 = $19,700 (the total purchase price for 20 bonds)
$19,700 x 97% = $19,089 (the amount recorded in the long-term investment account on November 1,20A)

Therefore, the best choice is B, $19,400.

On November 1,20A,Katz Company Purchased Twenty $1,000,9% Bonds (Interest Is