A Company Paid $37,800 Plus a Broker's Fee of $525

question 72

Multiple Choice

A company paid $37,800 plus a broker's fee of $525 to acquire 8% bonds with a $40,000 maturity value as a long-term investment. The company intends to hold the bonds to maturity. The correct entry to record the purchase of the bond investment is:

• A) Debit Long-Term Investments-HTM $38,325; credit Cash $38,325.
• B) Debit Long-Term Investments-HTM $37,800; credit Cash $37,800.
• C) Debit Long-Term Investments-HTM $37,800; debit Loss on Investment $525; credit Cash $38,325.
• D) Debit Long-Term Investments-HTM $37,800; debit Investment Expense $525; credit Cash $38,325.
• E) Debit Cash $40,000; credit Long-Term Investments-HTM $40,000.

---

Definitions:

Axial Skeleton

The part of the skeleton that consists of the bones of the head and trunk of a vertebrate.

Scapula

The shoulder blade.

Foraminae

Natural openings or holes, especially in bones, through which nerves and blood vessels pass.

Vertebrae

The bones in the spinal column.