Seamark buys $300,000 of Eider's 8% five-year bonds payable at par value.Interest payments are made semiannually.Seamark plans to hold the bonds for the five year life.When the bonds mature,the journal entry to record the proceeds will be:

Question

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When the bonds mature, the company will receive the par value of the bonds, which in this case is $300,000. Thus, the journal entry should debit Cash for $300,000 and credit Long-Term Investments-HTM (held-to-maturity) for $300,000, which is the account where the bonds were initially recorded. This entry will realize the gain or loss on the investment, which is the difference between the cost of the bonds and the cash received at maturity. However, since no information is given about a gain or loss, we cannot make any assumption on this matter.

Seamark Buys $300,000 of Eider's 8% Five-Year Bonds Payable at Par