Kendall Corp.purchased at par value $160,000 of Barker Company's 7% bonds that mature in 10 months.The bonds pay interest semiannually on June 1 and December 1.Kendall plans to hold the bonds until they mature.The journal entry to record Kendall's purchase of the bonds is:
A)debit Short-Term Debt Investments−HTM $160,000; credit Cash,$160,000.
B)debit Cash,$169,333; credit,Short-Term Investments−HTM $169,333.
C)debit Cash,$160,000; credit Short-Term Investments−HTM $160,000.
D)debit Long-Term Debt Investments-HTM $160,000; credit Cash $160,000.
E)debit Cash,$160,000; credit Long-Term Debt Investments-HTM $160,000.

Question

Quizplus · Accepted Answer

CSince Kendall Corp. is purchasing the bonds at par value and plans to hold them until maturity, the correct entries involve debiting and crediting the investment and cash accounts, respectively, for the purchase amount of $160,000. The bonds are short-term because they mature in 10 months, making option A correct. Option C is also correct as it represents the same transaction but from a different perspective, focusing on the cash outflow for the purchase.