On February 1, 2014, ABC purchased 10 $1,000, 12 percent bonds at 96 as a short-term investment. Interest is payable semi-annually on July 1 and January 1 of each year. How much cash did ABC spend on February 1, 2014? What amount should be debited to the investment account? $\begin{array}{|r|r|r|}
\hline&\text { Total Cash Spent}& \text {Debit to Investment Account }\
\hline 1&\$ 10,100 & \$ 10,000 \
\hline 2&\$ 9,600 & \$ 9,700 \
\hline 3&\$ 9,700 & \$ 9,600 \
\hline 4&\$ 10,000 & \$ 10,100 \
\hline
\end{array}$

Question

Quizplus · Accepted Answer

ABC spent $9,600 to purchase the bonds (10 bonds * $1,000 * 96%) and the investment account should be debited for the purchase price of the bonds, which is $9,600.

On February 1, 2014, ABC Purchased 10 $1,000, 12 Percent