Kern Company Purchased Bonds with a Face Amount of $800,000

question 61

Multiple Choice

Kern Company purchased bonds with a face amount of $800,000 between interest payment dates. Kern purchased the bonds at 102, paid brokerage costs of $12,000, and paid accrued interest for three months of $20,000. The amount to record as the cost of this long-term investment in bonds is

• A) $848,000.
• B) $828,000.
• C) $816,000.
• D) $800,000.

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Definitions:

Absolute Advantage

The capability of a party to produce a greater quantity of a good, product, or service than competitors, using the same amount of resources.

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Heavy vehicles designed for agricultural use, primarily to mechanize farming tasks including plowing, planting, and harvesting.

Opportunity Cost

Forfeiting possible rewards from various alternatives when a singular option is chosen.

Crude Oil

A natural fossil fuel consisting of hydrocarbon deposits and other organic materials that can be refined to produce various types of energy products.