Question

Watt Company purchased $300,000 of bonds for $315,000. If Watt intends to hold the securities to maturity, the entry to record the investment includes:

Select one:
A. a debit to Held-to-Maturity Securities at $300,000
B. a credit to Premium on Investments of $15,000
C. a debit to Held-to-Maturity Securities at $315,000
D. none of these.

Answer 1

The correct entry to record the investment in bonds by Watt Company is a debit to Held-to-Maturity Securities at $315,000.

Step-by-step explanation:

The correct entry to record the investment in bonds by Watt Company would be:

C. a debit to Held-to-Maturity Securities at $315,000

This entry reflects the cost of the bonds purchased. It is important to note that when bonds are purchased at a premium, as in this case, the premium is not recorded separately but is included in the total cost of the investment.