Leonard Technologies Invests $68,000 to Acquire $68,000 Face Value,10%,five-Year Corporate

question 52

Multiple Choice

Leonard Technologies invests $68,000 to acquire $68,000 face value,10%,five-year corporate bonds on December 31,2014.The bonds will mature on December 31,2019.The bonds pay interest semiannually on December 31 and June 30 every year until maturity.Assume Leonard Technologies uses a calendar year.Based on the information provided,which of the following will be included in the journal entry for the transaction on December 31,2018?

• A) a credit to Interest Revenue for $6800
• B) a debit to Interest Revenue for $6800
• C) a credit to Interest Revenue for $3400
• D) a debit to Interest Revenue for $3400

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Definitions:

Salvage Value

An asset's forecasted residual value once it has fulfilled its period of usefulness.

Sales

The total amount of revenue generated from the sale of goods or services by a company.

Net Present Value Method

A financial analysis tool used to evaluate the profitability of an investment by determining the present value of expected future cash flows.

Working Capital

The difference between a company's current assets and its current liabilities, indicating short-term financial health.