Talent Company purchased as a short-term investment TRUE AND FALSE 1. On January 1, Talent Company purchased as a short-term investment a $1,000, 8% bond for $1,050. The bond pays interest on January 1 and July 1. The bond is sold on October 1 for $1,200 plus accrued interest. Interest has not been accrued since the last interest payment date. What is the entry to record the cash proceeds at the time the bond is sold? a. Cash 1,200 Debt Investments 1,200 b. Cash 1,220 Debt Investments 1,050 Gain on Sale of Debt Investments 150 Interest Revenue 20 c. Cash 1,220 Debt Investments 1,200 Interest Revenue 20 d. Cash 1,200 Debt Investments 1,050 Gain on Sale of Debt Investments 150 2. Which of the following is not a true statement about the accounting for debt investments? a. At acquisition, the cost principle applies. b. The cost includes any brokerage fees. c. Debt investments include investments in government and corporation bonds. d. The cost includes any accrued interest. 3. The cost of debt investments includes each of the following except a. brokerage fees. b. commissions. c. accrued interest. d. the price paid. 4. If a short-term debt investment is sold, the Investment account is a. credited for the face value of the bonds at the sale date. b. credited for the cost of the bonds at the sale date. c. credited for the fair value of the bonds at the sale date. d. debited for the cost of the bonds at the sale date. 5. In accounting for debt investments, entries are made to record each of the following except the a. acquisition. b. interest revenue. c. amortization of any discount or premium. d. sale. Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help
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