Landmark Corp.buys $300,000 of Schroeter Company's 8% five-year bonds payable at par value on September 1.Interest payments are made semiannually.Landmark plans to hold the bonds for the five year life.The journal entry to record the purchase should include:

Question

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Since Landmark Corp. plans to hold the bonds for the full five-year life, they would classify as held-to-maturity (HTM) investments. Therefore, the journal entry to record the purchase should include a debit to Long-Term Investments-HTM for the full purchase price of $300,000. There is no need to debit any short-term investments accounts, as the bonds are being held for the long term. Cash should be credited for the same amount.