On August 1, 2020, Peterson Corp

question 120

Short Answer

On August 1, 2020, Peterson Corp. acquired 20, $ 1,000, 8% bonds at 95 plus accrued interest. The bonds were dated May 1, 2020, and mature on April 30, 2020, with interest paid semi-annually on October 31 and April 30. The bonds will be held to maturity. Assuming the amortized cost model is used, the entry to record the purchase of the bonds on August 1, 2020 is a) Bond Investment at Amortized Cost.................9,500
Interest Income...........................................200
Cash............................................................................9,700

b)Bond Investment at Amortized Cost...........9,700
Cash...........................................................................9,700

c)Bond Investment at Amortized Cost.........9,500
Interest Receivable..............................................200
Cash...........................................................................9,700

d) Bond Investment at Amortized Cost...........10,000
Interest Income.....................................................200
Discount on Debt Securities..........................500
Cash ......................................................................9,700

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Definitions:

U.S. Automobile Industry

A significant sector of the U.S. economy, involving the design, manufacture, and sale of motor vehicles within the United States.

Oligopoly

represents a market structure with a small number of large firms dominating the industry, leading to potential collaboration and less competitive market conditions.

Total Revenue

The total amount of money received by a company from selling its goods or services before any costs or expenses are deducted.

Upsloping Line

In economics, represents a graph where the value or quantity increases as another variable increases, often seen in supply curves.