What accounts are increased andor decreased by the receipt

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Reference no: EM13590836

On January 1, Highland Corporation purchased $85,000 of six percent, three-year bonds as long-term investment. Iterest is paid annually. The company is not involved in active trading of securities.

a. What accounts are increased and/or decreased by the purchase of this bond and by which amount?

b. What accounts are increased and/or decreased by the receipt of the first interest payment on the bonds in part A and by which amount?

c. Assuming the company intends to hold the bonds to maturity, what accounts are increased and/or decreased at the end of the first year if the market value of the bonds is $88,500 at that time?

d. How would your answer to part C differ if the company does not intend to hold the bonds to maturity?

e. What accounts would be increased and/or decreased at the end of the first year then and by what amount?

Reference no: EM13590836

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