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26 May, 10:19

On january? 1, 2017, dodge company purchases? $90,000, 7% bonds at a price of 86.4 and a maturity date of january? 1, 2027. dodge company intends to hold the bonds until their maturity date. interest is paid? semiannually, on january 1 and july 1. dodge company has a calendar year end. the entry to record the purchase of the bond investment on january? 1, 2017,? is

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  1. 26 May, 10:34
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    We should note that the bond investment account is recorded at cost by the Bondholder or Investor.

    The cost or price is calculated as:

    Cost = $90,000 * 86.4%

    Cost = $90,000 * 0.864 = $77,760

    Therefore, the entry to record should be:

    debit Held-to-Maturity Investment in Bonds for $77,760 and credit Cash for $77,760
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