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What journal entry records the acquisition of the bonds

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Question - Brown Inc. (BI) reports an investment in bonds using the amortized cost method. The bonds have a face value of $1,000,000 and were purchased on January 1, 20X7. The market interest rate is 8% and the bonds pay interest at a rate of 6%. Interest payments are made every June 30 and December 31. The bonds mature 10 years from the date of purchase, on December 31. What journal entry records the acquisition of the bonds on January 1, 20X7?

a) Dr. Investment in bonds$864,100 Cr. Cash $864,100

b) Dr. Cash$864,100 Cr. Bonds payable $864,100

c) Dr. Investment in bonds$1,000,000 Cr. Cash $1,000,000

d) Dr. Investment in bonds$664,496 Cr. Cash $664,496

Reference no: EM132411950

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