A bond sinking fund investment is started on January 5, 2013, by transferring $10,000 in cash to the fund. This $10,000 is invested and earns $1,100 during 2013. The entry to record the earnings made on the sinking fund investment includes
A) a debit to Cash for $1,100 and a credit to Income from Sinking Fund Investment for $1,100.
B) a debit to Cash for $1,100 and a credit to Bond Sinking Fund Investment for $1,100.
C) a debit to Bond Sinking Fund Investment for $1,100 and a credit to Income from Sinking Fund Investment for $1,100.
D) a debit to Cash for $1,100 and a credit to Interest Income for $1,100.
Correct Answer:
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